U.C.C. quarterly

THE U.C.C. QUARTERLY
VOLUMES NO. 2 SPRING, 1944
Retail Trade—From Sales Clerk to Customer
PUBLISHED BY
UNEMPLOYMENT COMPENSATION COMMISSION OF NORTH CAROLINA
Page 34 THE U. C. C. QUARTERLY Spring, 1 944
The U. C. C. Quarterly PRESENT STATUS OF STATE PLANNING
Volume 2 ; Number 2 Spring, 1944
Issued four times a year at Raleigh, N. C, by the
UNEMPLOYMENT COMPENSATION COMMISSION OF
NORTH CAROLINA
Commissioners: Judge C E. Cowan, Morganton; C. A. Fink,
Spencer; Mrs. F. L. Fuller, Jr., Durham; R. Dave Hall,
Belmont; R. Grady Rankin, Charlotte; Dr. Harry D. Wolf,
Chapel Hill.
State Advisory Council: Capus Waynick, High Point, Chair-man;
Willard Dowell, Raleigh; Marion W. Heiss, Greens-boro;
H. L. Kiser, Charlotte; Dr. Thurman D. Kitchin, Wake
Forest; Robert F. Phillips, Asheville; Mrs. R. J. Reynolds,,
Winston-Salem; Mrs. Emil Rosenthal, Goldsboro; W. Cedric
Stallings, Charlotte.
WILLIAM R. CURTIS Acting Chairman
R. FULLER MARTIN Director
MRS. FRANCES TREADWELL HILL Editor
Regular Contributions in each issue from the
united States employment service for
north carolina
Agency of the War Manpower Commission
Cover illustrations represent typical North Carolina industries
under the unemployment compensation program.
Cover for Spring lf>H—Retail Trade—From Sales Clerk to
Customer. Photograph by Germino, Herald-Sun Papers,
Durham, N. C, taken through the courtesy of Ellis Stone &
Co. The largest group of employers contributing to the
Unemployment Compensation Fund in this state are the
retail merchants. In 1943, the Commission handled 2,532
active employer accounts in the industry group classified as
retail trade. So insured against loss of their jobs were
some 50,154 workers.
Although the usual industry feature article is omitted
from this issue of the U. C. C. Quarterly, the study on
"Extension of Unemployment Compensation Coverage to
Employers of One or More Workers" chiefly concerns a much
larger group of retail merchants who at present are not
subject to the U. C. Law in North Carolina.
Sent free and upon request to responsible individuals, agencies,
organizations and libraries. Address: U. C. C. Informational
Service, Raleigh, N. C.
CONTENTS
Present Status of State Planning, By Capus
Waynick 34
Extension of Unemployment Compensation To
Employers of One or More Workers 35
Review of Business Trends, By S. F. Campbell 39
An Explanation of the Word "Voluntarily" as
Used in Connection With a Disqualification
for Leaving Work, By C. U. Harris and
Ralph Moody 43
Notes on U. C. C. Operations 45
U. C. Fund Has Benefited 300,000
Veterans Urged to Apply for Jobless Insurance
Payroll Tax Reductions
Wage Record Accounting
U. C. C. Benefits Denied to 619 Cooleemee Workers
Special Research Studies
Voluntary Contributions to Employer Reserve Accounts
Analysis of Employers Covered By U. C. Law
The Unemployed 50
Disability Insurance, By B. S. Sanders 51
North Carolina Plants Continue to Win Awards 53
Neither Too Young Nor Too Old 56
The Switchboard as a Battlefront . 57
Civilian Awards 58
By Capus Waynick, Chairman, U.C.C. Advisory
Council; Member, State Planning Board.
The two public agencies that have the most poig-nant
interest in what the State Planning Board may
do are the U.C.C. and the U.S.E.S. Both concern
themselves with the insistent, human problem of a
livelihood for the average citizen. Liberty without
a meal ticket is an empty principle. Man does not
live by bread alone but he doesn't live at all on the
earthly plane long without bread or its equivalent.
For most of us, therefore, a job is the thing—
a
chance to work under reasonably pleasant condi-tions,
steadily earning a living.
One of the first considerations of all planning
must be the development of that kind of job for
everybody who wants it. State planning must keep
job-development and job-maintenance constantly in
view as a primary objective. These two state agen-cies,
therefore, not only will watch the progress of
the State Planning Board with keen interest, but
they will assist it with accumulated data about em-ployment
conditions in the state before the war and
at the present time. These data are essential raw
material for both the prophet and the designer of
post-war conditions.
The State Planning Board, authorized by the 1943
General Assembly, is just now getting well under-way
with its work. It made an abortive start under
a chairman who had to surrender the responsibility.
That caused the postponement of the selection of
paid personnel, and not until April 1 did the man-aging
director assume his post. That official is Felix
Grisette, of Chapel Hill, drafted from the C.E.D.,
an unofficial agency which is trying to prepare pri-vate
enterprise for the shocks of peace. Fortu-nately,
the planning board executive's immediate
past work was good training for his new service.
Mr. Grisette is set up now in the Alumni Building
at Chapel Hill with clerical help but without his
assistant director. In the short time he has been
on the job he has developed a clear statement of
functions and policies for the board that are con-sistent
with the legislative directive and the board
has adopted the proposals.
The April meeting of the board authorized the
staff to concentrate in the ensuing few months on
three undertakings: 1. Make a study of the build-ing
needs of state institutions, with the advice and
help of trustees and directors. 2. Make an analysis
of the North Carolina tax structure for use in pro-motion
of new industries. 3. Cooperate with local
planning boards and commissions.
The board has expressed the belief that there are
five broad fields of activity in which it properly may
function : 1. Public works planning. 2. Industrial
planning. 3. Agricultural planning. 4. Tourist and
travel planning. 5. General improvement planning.
That final item suggests a statue to the unknown
god, but the board is somewhat more specific about
it. "General improvement" is defined as beneficial
Spring, 1 944 THE U. C. C. QUARTERLY Page 35
effects on problems of education, public health, pub-lic
welfare, recreation and culture.
Obviously the accepted province of the Planning
Board is wide, but it has declared an immediate pur-pose
not to scatter its shots. What work is done
therefore, in the ensuing months before the next
legislature meets, is likely to be confined to a nar-rowly
limited portion of that comprehensive pro-vince.
What can State Planning do to make jobs against
that unknown future day of military and war-in-dustry
demobilization? It can do something, of
course, by having ready well-considered proposals,
if not actual plans and specifications, for public
buildings and other public structures. That kind
of service is important, but the expenditure of public
funds to create work opportunities is at best a self-limiting
device for the post-war years. Planning
must go further. We must find some way to use
our expanded production equipment to produce the
kind of merchandise that will enrich living while
furnishing jobs for those who need them.
The State Planning Board has an analysis of the
industrial state furnished through the work of Dr.
Howard Odum's staff which may become the first
publication of the new board. It is rich in sugges-tion
and it might prove to be of tremendous im-portance
through stimulation of industrial effort in
the state. An idea based on understanding of
present conditions is a tremendous creative force.
That report is full of such ideas.
RECOMMENDED READING
{Look to Shelter For a Rainy Day)
Unemployment compensation benefits paid in
North Carolina during past months have been the
lowest in amount since the system was started. It
doesn't take a genius to figure the reason. Anybody
who wants a job has it.
And now while everybody has one or can step a
few feet and get one, there is a little fable they
should read again. It is the story of the grasshopper
and the ant.
The wartime boom will not last forever; the sun
of an artificial prosperity will have to set some day.
Only a fool would disregard the warnings of the
Great Depression.
From an Editorial in the Charlotte Observer, 1943.
Extension of Unemployment Compensation Coverage to
Employers of One or More Workers*
A SUMMARY OF EXPERIENCE IN THIRTEEN STATES WHERE PRESENT COVERAGE IS THAT OF ONE OR MORE
WORKERS
The reported experience of thirteen states where
unemployment insurance covers employers of one or
more workers adds up to a total of evidence over-whelmingly
in favor of such full coverage. Limited
coverage, as that of employers of eight or more
workers, is revealed as an administrative, a social
and an economic handicap.
The thirteen states concerned are Arkansas, Dela-ware,
the District of Columbia, Hawaii, Idaho,
Massachusetts, Minnesota, Montana, Nevada, Penn-sylvania,
Utah, Washington, and Wyoming. These
include states both large and small, whether on the
basis of population or geography, and states that are
predominantly agricultural as well as two large in-dustrial
commonwealths. Yet, regardless of such
differences, their answers to questions with respect
to full unemployment compensation coverage bear
close parallels.
The questions on which these thirteen states were
asked to give such information as they could are as
follows
:
1. What administrative difficulties have you en-countered
in administering your coverage pro-vision
as it applies to employers of fewer than
eight workers ?
2. How many of your employers employ (a)
fewer than eight workers ; and (b) more than
eight workers?
*A report prepared for the State Advisory Council, U. C. C. of
N. C.
3. How many workers are employed by employers
of (a) fewer than eight; and (b) more than
eight ?
4. Do the contributions from employers of fewer
than eight meet the benefit liability of the
workers of such employers?
'5. What have been the economic effects of extend-ing
coverage to employers of fewer than eight ?
More specifically, is there any evidence that
the extension of coverage to include such em-ployers
forced any of them out of business ?
The concensus of opinion recorded in the replies
indicates
:
(1) Administrative difficulties are overshadowed
by administrative advantages.
(2) For the thirteen states, 77 percent of all em-ployers
employ fewer than eight workers, and 23
percent employ more than eight.
(3) For the thirteen states, 13 percent of all
covered workers are employed by units with fewer
than eight; and 87 percent by units with more than
eight.
(4) On the whole, contributions from employers
of fewer than eight more than meet the benefit
liability of their workers, with a good margin of
contributions over benefits. Individually, there is
considerable difference in this respect as between em-ployers
in different industry groups.
(5) All states are in agreement in reporting no
Page 36 THE U. C. C. QUARTERLY Spring, 1944
unwholesome economic effect on small firms which
can be charged to unemployment insurance coverage.
On the contrary, several states emphatically point to
beneficial economic results.
Some of the more important facts developed by the
inquiry deserve mention. Specifically with regard to
the questions put, the answers received may be sum-marized
as follows
:
ADMINISTRATIVE DIFFICULTIES
Most of the states in which a comparison is pos-sible
recognize some difficulties in administration,
but in practically all cases these are such as might be
expected to arise during the early period of any new
program, and which may be expected to disappear as
employers become familiar with the routine of mak-ing
reports.
Such difficulties as inadequate record keeping by
small employers, delinquent reports, a higher mor-tality
rate among small establishments, and addi-tional
auditing and paper work are mentioned by
some of the states; and yet are denied by others as
being any more of a problem to extended than to
limited coverage.
It appears obvious from the reports that for at
least a time the extension of coverage results in an
increase in the total cost of administration, but at
the same time results in an actual reduction in the
unit cost per employer. The increase in total cost
may be offset eventually, by the reduction in the
expense of liability determinations.
The potential increase in administrative cost is not
raised by the inquiry; however, one state furnishes
data indicating that while coverage is increased 22
percent, the unit cost per 100 employers is reduced
by 46 percent.
See Appendix A for excerpts from reports.
INCREASE IN NUMBER OF COVERED
EMPLOYERS AND OF COVERED WORKERS
The thirteen states involved in the inquiry repre-sent
some 367,700 employers and 6,827,280 covered
UNEMPLOYMENT COMPENSATION COVERAGE OF EMPLOYERS
OF ONE OR MORE WORKERS
Number of Employers
With
Workers Employed by Employers
With
STATE
Fewer
Than 8
Workers
%of
Total
8 or more
Workers
%of
Total
Fewer
Than 8
Workers
%of
Total
8 or more
Workers
%of
Total
Arkansas
Delaware
D. C
14,277
3,151
12,000
4,000
. 7,780
54,000
16,538
7,500
1,692
124,000
5,191
30,000
3,200
79
70
71
77
84
75
67
75
63
80
72
79
80
3,743
1,368
5,000
1 . 195
1,506
18,000
8,269
2,500
989
31,000
2,000
8,000
800
21
30
29
23
16
25
33
25
37
20
28
21
20
32,467
9,470
50,000
9,000
13,679
270,000
97,500
24,000
4,395
280,000
12,441
90,000
10,000
13
8
17
10
12
16
15
20
11
10
11
20
20
220,183
108,373
250,000
81,000
96,475
1,450,000
552,500
96,000
33,862
2,520,000
105,935
370,000
40,000
87
92
83
90
88
84
85
80
89
90
89
80
80
Hawaii
Idaho
Massachusetts...
Minnesota. ...
Montana
Nevada
Pennsylvania
Utah ___
Washington
Wvoming..
Total 283,330 77 84,370 23 902,952 13 5,924,328 87
workers. Although there are many statistical differ-ences
in the figures as between states, such differ-ences
are immaterial for the purpose of the present
inquiry and do not affect the conclusions to be drawn
from it.
The full coverage in the thirteen states places
283,330 covered units in the group of small em-ployers,
and 84,370 in the group employing eight or
more workers. Similarly, the number of covered
workers employed by the smaller firms is given as
902,952, and the number working for employers of
eight or more as 5,924,328.
On this basis, any state which plans to extend its
coverage from the minimum provision of employers
of eight or more workers to include the smaller em-ployers
of fewer than eight workers, may expect its
program to embrace over three times as many em-ployers
as before, and 15 percent more workers.
ADEQUACY OF CONTRIBUTIONS
TO MEET BENEFIT LIABILITY
Four states express the emphatic opinion that con-tributions
from small firms are more than adequate
for benefit payments insofar as experience to date is
concerned. One state estimates that contributions
are adequate in 80 percent of the cases. But for
most of the states, the recent period included in ex-tended
coverage is regarded as an insufficient basis
for determining the adequacy of employer reserves
for units with fewer than eight workers. It is
generally recognized that the solvency of an em-ployer's
reserve account is related less to the number
of workers employed than to the nature of his busi-ness
and other factors.
It appears that a much higher proportion of the
accounts of small employers are likely to become
eligible for lower tax rates under employer ex-perience
rating plans.
One state reports a higher, and one a lower pro-portion
of small as against large employers with
overdrawn accounts. In either case, the amounts
overdrawn by the larger employers are many times
greater than the insufficiencies of the small accounts.
See Appendix B for excerpts from reports.
ECONOMIC EFFECTS OF FULL COVERAGE
No state gives any evidence to show that extended
unemployment compensation coverage, while levying
a tax on small employers, operates in any case to
force such an employer out of business. All states
express the view that the extension of coverage has
no unwholesome effect on small business. Rather,
the reverse result seems to follow. Statements in
the reports emphasize that extended coverage has
been especially beneficial to the small employer:
(a) It removes any charge of discrimination among
employers and improves business relations; (b) If
enables employers to obtain a better class of workers
;
(c) As unemployment compensation operates to
maintain consumer purchasing power, it has a
greater practical value to the smaller employers.
See Appendix C for excerpts from reports.
Spring, 1 944 THE U. C. C. QUARTERLY Page 37
Appendix A
—
Administrative Difficulties
"Getting employers having fewer than eight employees to
keep accurate records and make reports promptly."
"The experience of this Board in administering coverage
to employers of one or more workers is as follows:
A. It is necessary to maintain a large field staff to in-struct
employers in filing reports, secure verified informa-tion
and follow up ignored debit memos before prosecuting
on violations.
B. Inaccurate remittances submitted result in a large
number of debit and credit memoranda.
C. The increased delinquencies require a larger legal
staff to enforce collections.
D. The number of employers going into business and
retiring from business, coming active or inactive, changes of
ownership are more numerous. To maintain control of this
situation a regulation is necessary to require 'no employee
reports'."
"We have encountered no particular administrative diffi-culties
except that the mortality rate of small businesses is
much higher than that for the larger organizations. This to
some extent increases administrative costs. The bookkeep-ing
of small businesses generally is not very good; there-fore,
we have experienced some difficulty in obtaining
accurate reports. Also, the delinquency rate for small em-ployers
is considerably higher than that of larger em-ployers."
"It is our opinion that a straight one or more coverage
creates fewer administrative problems. We have had very
little difficulty. It is true that there is a tendency for the
small employer to be delinquent, and in numbers of de-linquent
accounts, the small employer, should your law be
changed, will irritate your collection people. On the other
hand, amounts involved are hardly worth considering. As
time goes on you will find the small employers reporting
more promptly. At least that is our experience. The small
employers are honest, and after you have given up on an
account, payment will be made. We have had payments of
delinquent employer accounts made by employers who have
lost their business in a commercial failure and have gone
out to work for another employer, lost their jobs, have
become eligible for unemployment compensation benefits,
and have paid their old delinquent employer tax out of their
benefit checks. We feel that we have less trouble with the
small employers, than we would have in trying to explain to
workers ineligible because their employers did not employ
sufficient other men to become subject, than we have
through the minor collections. Administrative difficulties
of a one or more law are largely due to careless bookkeeping
methods on the part of the small employer. It is a little
more difficult to obtain wage reports and to make collec-tions.
The small employer, going broke, is prone to leave
the state and it is hard to get in touch with him to obtain
wage information. Correspondence is increased tremen-dously."
"The administrative task, in some of its aspects, has been
intensified with respect to small employers. Both reporting
delinquency and turnover in employer accounts are rela-tively
greater among small employers than among those
with larger payrolls."
"We haven't experienced administrative difficulties in
connection with administering the Employment Security Act
as it applies to employers with fewer than eight workers.
However, we have had to increase our staff in efforts to
obtain complete coverage of all employing units which
should be subject to the act. The turnover in employing
units is considerably greater among small employers. It is
believed that it costs as much or more to carry the account
of a small employer, than a large employer; but of course
the larger the employer, the greater the work would be in
processing wage reports."
"We have not found any very substantial administrative
difficulties in applying the Law to the employers of fewer
than eight workers. The most substantial difficulty is in
connection with the securing of reports. The occurrence of
report delinquency in the case of the smaller employer is
more frequent than with the larger employer. Our normal
expectation of report delinquency at the end of the reporting
period for employers of eight or more was 5%. Our present
experience with all employers including the "one or more"
is 9%. Apparently about the same proportion of employers
respond to first notices of report delinquency. Roughly,
50% of the reports come in in response to the delinquency
notices. Our experience with the employers of eight or
more was identical.
"Of course the number of births and deaths is consider-ably
higher among the smaller employers and hence our
account change load has very materially increased. Never-theless,
we have not found this a substantial problem. The
whole answer in connection with obtaining reports and the
money due thereon, as we see it, lies in a speedy follow-up
on report and money delinquency.
"We were particularly fortunate in having established a
rather complete file with respect to non-liable employers
well before we undertook the new coverage. Several weeks
before the date the new coverage commenced, this file was
thoroughly combed and checked against records of our State
Workmens Compensation Department and the Bureau of
Internal Revenue Federal Insurance Contributions Tax
Records. We were thereby enabled to establish about 90%
of our new accounts from information received by mail. The
balance had to be obtained by field contact. All this was
done between July 1, the new coverage date, and September
30. Thereafter in October and November, we put on a concen
trated house to house campaign, having first supplied our
field men with a list of the newly activated accounts in
their areas. Calls were not made on any firm for which we
had an account established. At the same time considerable
publicity was released through the newspapers, radio and
any other suitable available channels. A great deal of
future difficulty can be avoided if a thorough-going job of
establishing the new accounts is done in the beginning. We
were able to complete our full action on the new accounts
within five months from the date the coverage started.
Particular attention should be paid to planning in this
respect.
"We in this state are quite pleased with the way the
coverage of "one or more" was accepted by the employers.
The proposal went through our legislature with practically
no opposition and no serious objections were subsequently
voiced. A complete "one or more" coverage presents some
advantages over the payroll test, or weeks test of employ-ment
in that we are no longer faced with the necessity for
making liability audits or quibbling with the employer over
exact payroll counts or amounts in a given week. When
our Field Advisor walks into the employer's place of busi-ness,
the only question to be determined is whether or not
the employment is subject employment. Although the time
saved in liability audits probably does not equal the in-creased
effort in securing reports from the small employers,
we are completely in favor of complete coverage rather than
the use of some qualifying test to eliminate the short time
employment. At the time we adopted the extended cover-age,
we also adopted an exclusion for "casual labor" which
is quite similar to that used by the Federal Social Security
Acts. This serves to eliminate a great deal of the inter-mittent
employment which otherwise would be covered. Our
coverage is practically identical with that of the Federal
Insurance Contributions Act and we find this advantageous.
Aside from the matter of convenience to the employer, we
find ourselves better able to police our accounts by direct
clearance with the Collector of Internal Revenue on all
account changes.
"We also adopted into our statute at the same time, a
provision for summary collection of contributions including
in the procedure a provision for an administrative hearing
of disputed assessments similar to that provided for benefit
denials. Had it not been for this summary procedure and
the allied hearings procedure, we would not have been able
to handle the "one or more" coverage so easily. There are
so many cessations in small business that a rapid collection
remedy must be afforded. Civil suit will not do because it
is too slow. The provision for administrative hearings is
desirable because it permits the small employer to present
his case at little cost. Defense against a civil suit is not a
desirable remedy for the small employer who can ill afford
the action. Provision is, of course, made for appeal to the
courts."
"The smaller employer cannot afford to maintain the pay-roll
records in a manner comparable Avith the larger firms
and, for this reason, some difficulty has been experienced in
field audits. It is our observation that the changes in
ownership entity are more frequent among smaller busi-nesses."
"We find that the majority of employers of fewer than
eight workers fail to keep good records and are usually slow
in submitting reports."
Page 38 THE U. C. C. QUARTERLY Spring, 1 944
"The problem of seeking out small employers was simpli-fied
greatly through the cooperation of the Regional Repre-sentative
of the Social Security Board, who obtained from
the Bureau of Old Age and Survivors Insurance, the com-plete
list of their covered employers in the state. This
material was invaluable to us in carrying out the program.
Much time and effort was spent during the time when the
status of employers of one was being examined to educate
them in their responsibilities and in the requirements of
the law. In most cases, a field agent of the Division went
to the small employer's place of business to get the infor-mation
necessary to determine his status and to instruct
him in the things he must do to comply with the law. By
following that procedure many of the difficulties that were
anticipated have failed to materialize.
"The problem involved in determining subjectivity of an
employer are not as difficult when employers of one are
subject as they were when the coverage was extended only
to employers of eight or more. Under the broader coverage,
it is necessary to determine only that the employer had some
one in employment for some day in each of twenty weeks.
There has been some difficulty, however, among the pro-fessional
groups where one individual works for more than
one professional man. This problem has been simplified
somewhat, by getting one of the individuals in the group to
accept responsibility for the taxing and reporting require-ments
and declaring him to be subject to the law.
"It does not seem to be any more difficult to enforce the
contribution and reporting requirements with small em-ployers
than it is with employers of eight or more. The
difference between the two groups in the percentage of
delinquency for reports or money, is very slight. For the
most part, the small employers are paying their contribu-tions
on time and their reports as rendered are reasonably
correct.
"There is a much greater percentage of mortality among
small employers than among large ones. Currently much
of this is due to the war. Employers are drafted and close
their enterprises for the duration. Many others have sold
their businesses or closed up and entered defense work for
the duration. Others just enter business for awhile, fail to
make a go of it and close. This percentage of mortality does
not create a new administrative difficulty, but it increases
the amount of work necessary to be done in the maintenance
of employer status records.
"A rather annoying situation which exists, is the tendency
of small employers to file with us material that has no con-nection
with unemployment compensation. When quarterly
reports are due, we also receive such material as OASI re-ports,
withholding tax reports, Federal and State Income
tax reports, OPA ration forms, etc., with payments if any is
required. Generally such material is re-routed to its proper
destination and the employer is notified to that effect."
Appendix B
—
Adequacy of Contributions to Meet
Benefit Liability
"Considered as a group, the answer to this question is
yes, and if treated individually, the answer is no."
payroll, and their benefit charges are astonishingly high.
Small mercantile and real estate offices often have no bene-fit
charges against their accounts in our limited period of a
little more than four years of benefit payments."
"Currently the contributions of employers of four, five,
six, or seven workers are sufficient to meet the benefit
liability of such employers. As a matter of fact, many of
them are enjoying a reduced rate in 1943 because of their
experience since 1939. This also may be due to war con-ditions
since benefit payments for the years 1941 and 194 2
were far below normal. Since the coverage was not ex-tended
to employers of one until January 1, 19 43, no figures
are as yet available to determine whether the contributions
will meet the benefit liability in this class."
"We believe that it is the type of industry and not the
number of workers employed by employers which de-termines
the relative drain upon the fund for benefits. In
this state, the contract construction industry has year after
year drawn more in benefits than it has paid in contri-butions."
"We do not have exact information on the benefit liability
of the small employer. We know this much—that benefit
costs vary tremendously. Some small employers—in fact,
many small employers—change workers very infrequently,
and have no benefit costs against their accounts, or prac-tically
none. Other small employers are constantly chang-ing,
and benefit costs run many times their tax payments.
This question would be easier to answer by industry than as
a whole: We find that restaurants and drinking places em-ploying
two or three persons have a constantly changing
"It is our opinion that the covering of one or more
workers would not materially increase the benefit liability."
"We can only surmise since we have had no experience
with benefit payments of sufficient importance to justify any
conclusions. Nevertheless, we predict that contributions
from the small employers will be more than ample to meet
the benefit liability. It is pretty well established that the
small employer is not as much influenced by the economic
conditions which cause unemployment as is the larger em-ployer.
The most frequent causes of unemployment are in
connection with casual, seasonal, technical change and
cyclical factors. The only factor substantially affecting the
small employer, is that of fluctuations in the business cycle
and in this matter the reaction is apt to be slower than in
the case of the larger business."
"In a period of highest benefit payments, our study indi-cates
that the contributions paid by the smaller employers,
exceeds the benefits paid their former employees by more
than 20%.
Of the employers whose accounts were involved in the
employer experience rating study, about 35% of the smaller
employers were overdrawn as compared to about 20% of
the larger employers, but the overdraft of the smaller em-ployers
amounted to only about $150,000, as compared to
about $422,000 for the larger ones for the 36-month period."
"We have a 'pooled fund'. Although we have no detailed
report, from our experience, we believe there are not more
than twelve employers whose contributions were over-drawn
owing to benefits paid."
FROM A TABULATION OF EMPLOYERS' EXPERIENCE,
JANUARY 1, 1940 TO DECEMBER 31, 1942, BASED
ON NUMBER OF WORKERS PER EMPLOYER.
Employing
Unit of
1-8
workers
8 or more
workers
Accounts with Number of these
Excess with lower tax Accounts witli
Contributions rate of 1.9% Excess Benefits
2,684
1,162
1,885
222
661
304
Amount
Over-drawn
$108,435
669,118
Appendix C
—
Economic Effects of Full Coverage
"We feel it is extremely unlikely that smaller employer-coverage
under the Law has forced any such employer out
of business."
"There have been occasions wherein the employer claimed
he would have to cease business operations if forced to pay
the Unemployment Tax; but after investigation, in every
instance, the employer's failure is actually due to other
causes."
"There is no data to indicate that the extension of cover-age
to employers of fewer than eight has had adverse
economic effect. The extension of coverage has in many
instances brought about better public relations, particularly
among contractors and other employers obtaining business
on bids, as excluding the small operator from coverage, has
the tendency of giving him a price advantage which the
larger operator resents. Being under coverage has a bene-ficial
effect as far as the small operator is concerned, in that
he is able to obtain more competent help than would be
possible otherwise."
"We have no evidence that the extension of coverage to
include small employers, has forced any appreciable number
of them out of business."
"We think the economic effects of a coverage of one or
more have been good. Our workers are better satisfied, and
while we have many complaints from the small employer,
we greatly favor complete coverage. We have no informa-tion
other than an occasional note on a contribution report
from small employers indicating that they have been forced
out of business because of the unemployment compensation
tax. Is not this claim, made occasionally and on rare oc-casions,
somewhat ridiculous in view of the top limit Of
2.7% on their tax? I mean by that, any business that
would fail because of such a tax would, it appears, be
certain to fail in any event."
Spring, 1 944 THE U. C. C. QUARTERLY Page 39
"It is our opinion that the covering of employers of fewer
than eight employees has had no economic effects on their
business, and that no employer in this state has been forced
out of business because of this coverage."
"We have no evidence that unemployment compensation
coverage has resulted in any small employer being forced
out of business."
"There is no evidence whatsoever that the extension of
coverage has unduly burdened small business. We know of
no individual cases wherein a small employer has been
forced out of business because of the extended coverage.
On the other hand, we are of the opinion that small business
benefits from operations of unemployment insurance con-siderably
more than the direct cost to him in the way of
contributions, for the reason that in this state most of the
consumers' goods are distributed by small units. The bene-fit
checks used in the purchase of groceries, clothing, amuse-ments,
etc., flow to small establishments, increasing their
volume of business and, consequently, increasing profits."
"Insofar as we are aware, no small employer has been
forced to close because of the imposition of the unemploy-ment
payroll tax "
"There have been no apparent adverse economic effects
in the extension of coverage. As far as we know, no small
employer has charged or intimated that the burden of this
tax has in any way contributed to his liquidation. There
are, of course, openly voiced objections to the imposition of
the tax, but most of them come from the larger employers
and generally from the employers whose employees are less
apt to need the benefit protection of the Act," (this state
does not have an experience rating provision).
"We believe no employer has been forced out of business
because of the cost of coverage. It is doubtful whether
unemployment compensation would be of practical value in
maintaining purchasing power in our state if there were less
coverage."
"As far as we know, there has not been any case of an
employer being forced out of business because of his having
to make payments under the unemployment compensation
law."
Review of Business Trends
By S. F. Campbell, Supervisor, Bureau of Research and Statistics
This is an account of business activity in North
Carolina as reflected by movements in selected in-dicators.
Indices have been constructed on the basis
of the 1935-1939 average, seasonally adjusted, which
is taken as 100. Data from which the indices were
made tvere taken from, reports of the Federal Re-serve
Board, Bureau of the Census, Federal Power
Commission, U. S. Bureau of Mines, Survey of Cur-rent
Business, U. S. Post Office Departmetit, Life
Insurance Sales Research Bureau, State Department
of Labor, State Department of Revenue, and South-ern
Furniture Manufacturers Association.
The indicators selected include the following: cot-ton
consumption, active spindle hours, hours per
spindle in place, electrical energy productiori, cigar-ette
production, gasoline sales, new car sales, N. C.
batik debits, construction contracts, ordinary life
insurance sales, cement shipments, department store
sales, employment and payrolls (all industries) , em-ployment
and payrolls (all manufacturing), furni-ture
shipments, retail furniture sales, iveeks of un-employment
compensated. Complete mimeographed,
tables showing the monthly movements of these indi-cators,
and their relation to trend data, are available
on request.
Previous articles by Mr. Campbell on North Caro-lina
business activity are contained in the U. C. C.
Quarterly, Vol. I, No. 1, pages 26-27, and Vol. I,
No. 3, pages 82-83.—Editor's Note.
REVIEW OF 1943 BUSINESS LEVEL
As will be seen from the seasonal index of North
Carolina business activity, activities as a whole are
not subject to violent fluctuations, although there are
troughs in certain types of industry which are offset
by seasonal peaks in others. This tends to level off
the combined seasonal index. Four months of the
year are generally below normal, the range being
from 89.74 in February to 106.03 in October. How-ever,
the seasonal index is not adjusted for the
actual number of working days in the month and
this exaggerates the depression in the February in-dex.
It is also significant that three of the four
months which are below normal are in consecutive
order. The drop in December is due largely to the
holiday let-up in manufacturing, at which time tex-tile
production is 8.35 percent below normal; elec-trical
energy production 4.55 percent below ; cigarette
production 17.55 percent below; construction 8.35
percent below; furniture shipments from the State
27.30 percent below ; and cement shipments into the
state 39.29 percent below normal. The January in-dex
is depressed by inventory taking and the post
holiday sag in trade, which is then 33.54 percent
below the average for the year. July is the only
other month of the year which is below normal and
reflects the midsummer slack due to vacations, and
seasonal changes in styles, patterns, and stocks for
fall and winter trade.
Two bases for an index of North Carolina trends
are here used: (1) Ratio to long-time trend, in
which the amount of normal annual increment or
decrement has been eliminated, leaving only the
growth or decline due to cyclical influences ; (2)
Average 1935-1939 equals 100, with only seasonal
adjustment. Since the 1935-1939 base is the one
most generally used for month-to-month changes,
and includes whatever trend increment may have
been added to the 1935-1939 level, that index is here
used for review of 1943.
The effect of the war in most industries has been
to eliminate seasonality altogether, with peak pro-duction
continuous. However, in North Carolina a
number of industries necessarily retain their seasonal
movements, due to the non-availability of raw ma-terial.
These are represented in food manufacture,
tobacco processing, fertilizer and its chemical com-ponents,
cotton ginning, and other agricultural
services. The movements of these activities are not
included in the index here used, though their effect is
reflected indirectly through electrical energy produc-tion,
bank debits, and trade. The fluctuation of the
seasonal index ranged from 89.74 to 106.03, a maxi-mum
deviation of 18.15 percent, and while the
Page 40 THE U. C. C. QUARTERLY Spring, 1 944
monthly relatives have been adjusted for seasonal
variation there remained a deviation in the composite
index of from 151.85 in January to 182.14 in June, a
fluctuation of 19.95 percent, caused largely by the
irregular trend in construction which had a maxi-mum
deviation of 391.59 percent.
ELECTRICAL ENERGY PRODUCTION
No industrial activity has made such phenomenal
gains during the last decade as has the production of
electrical current. In 1932 the total production was
1,395,579,000 kw-hours, or a little more than 100
million hours per month. By 1942 production had
increased to an average of 370,857,000 million a
month and in 1943 reached an average of 416,563,000
kw-hours per month, nearly 5 billion kw-hours per
year, or 257.00 percent above 1932 and 12.06 percent
over 1942.
As electrical energy is produced only as needed,
with no "carry over," the index is especially signifi-cant
as a measurement of current industrial activity.
While the increase in production has been greatly
accelerated by war needs, the trend, independent of
the war, and despite the depression year, has been
consistently upward. The average annual increase
from 1920 to 1939 was 9.30 percent, compound in-terest
basis, and in only three years since 1920 was
there a decline from the previous year, in 1928, 1932,
and 1935. The year 1943 began with the index 83.18
percent above the 1935-1939 average, and this was
the lowest index of the year. The peak of produc-tion
for the year was reached in September with the
index at 281.71, and the year ended at 277.49, the
composite for the year being 239.85 compared to
207.99 for 1942.
CIGARETTE PRODUCTION
No data are available on the actual monthly pro-duction
of cigarettes. Production figures as used in
all government publications are taken from tax paid
withdrawals which over a year will represent, with
reasonable accuracy, actual production. The effect
of war demands is also discernible in this series,
though to less extent than in electrical energy and
textiles. Growth has been continuous since 1925
except for 1930-1931-1932, each of which years
showed a decline from the previous year. The aver-age
annual increase, 1935 to 1939, was 7.10 percent,
compound interest basis, while the gain from 1942
to 1943 was 9.29 percent. There was a considerable
sag in the index during May, June, and July, which
dropped to 126.57 in June from 158.60 in January,
but ended the year at 211.29 in December, with a
combined index for the year 1943 of 164.41, or 64.41
percent above the 1935-1939 average, compared to
150.22 for 1942.
GASOLINE SALES
The inclusion of gasoline sales for the purpose of a
business index is open to question because of present
restriction in sales, and while these restrictions do
depress the composite index the monthly relatives
were retained in order to indicate the progressive
effect of the rationing system. Despite these re-strictions,
gasoline consumption in four of the twelve
months of 1943 was above the average of 1935-1939
;
March 30.47 percent above ; April 10.93 percent
above; July 9.54 percent above and October 12.95
percent above. The year ended with the index at
93.75 for December and the index for the year was
99.21 compared to 109.69 for 1942. Average monthly
consumption was 29,568,000 gallons, or 11.47 percent
less than in 1942.
NORTH CAROLINA BANK DEBITS
Charges to individual bank accounts represent
probably the most significant barometer of business
trends of any series available, and it is of special
interest to compare the movements of the North
Carolina index with those of the nation, as this is the
only index which may be said to represent with equal
validity general trends at both the national and state
level.
It is also of special interest to compare the two
indices in relation to the long-time trend and on a
basis of the 1935-1939 average. With respect to the
long-time trend the North Carolina index has been
continuously higher than the national index since
1932. The margin began to grow less at the begin-ning
of 1942 due to the proportionately smaller par-ticipation
of North Carolina in the manufacture of
durable goods. In January 1943 for the first time in
more than ten years the national index rose above
the state level by 1.18 percent. The national increase
over North Carolina has continued progressively
each month until the year ended with the national
index at 232.65 or 16.06 percent above the North
Carolina index of 200.45. This, however, is on a
basis of the long-time trend, 1923-1940, with normal
annual increment eliminated, and the same does not
hold true with respect to the 1935-1939 average,
which includes the trend increment. On that basis
the state index is still above the national level. For
1943 the state index was 207.72, or 14.26 percent
above the national index of 177.42.
Without some knowledge of the relative position of
North Carolina and the nation with respect to bank-ing
activity during the 5-year base period 1935-1939,
the deviations above referred to are not so signifi-cant.
To obtain such knowledge trends were calcu-lated
by the least squares method from monthly data
for the period 1923 to 1940. Log trends were also
constructed and checked by Glover's Exponential
Growth Curve Formula. These showed an average
annual decline in bank debits at a rate of 0.25 percent
for the state and of 0.17 percent for the nation. The
average index for the 5-year period 1935-1939, based
on these trends, was 104.31 for the state and 98.22
for the nation.
State bank debits were declining at a more rapid
rate than the average for the nation by 0.08 per-centage
points over the 18-year period, 1923-1940.
The situation began to change after the 1929 collapse
though the state index did not reach 100 until 1936.
However, a trend computation for the period 1932 to
1939 indicated an annual increase for the state at a
rate of 5.00 percent, compound interest basis. It
appears, therefore, that not only was the relative
position of North Carolina better than that of the
nation during the base period 1935-1939 but that the
subsequent increase in the state, based on that aver-age,
has been at a more accelerated rate. In volume,
Spring, 1 944 THE U. C. C. QUARTERLY Page 41
NORTH CAROLINA BUSINESS INDEX
COMPOSITE AND SELECTED MONTHLY TRENDS, 1942-1944 TO DATE
INOEX
1943 North Carolina debits were 4.55 percent above
1942, compared to an increase in national bank debits
of 27.00 percent over the previous year.
CONSTRUCTION
No activity has been so violently affected by war
demands as construction. Contracts, which aver-aged
$4,544,000 monthly during 1935-1939, rose to an
average of $16,694,000 monthly in 1941, dropped to
$14,225,000 in 1942 and to $7,620,000 in 1943, a de-cline
of 46.43 percent from 1942 and of 54.36 percent
from 1941. These violent fluctuations are reflected
in the monthly relatives which ranged from 374.64 in
June down to 88.72 in May, and the index for the
year 1943 is 170.63, or 70.63 percent above the 1935-
1939 average, compared to an index of 321.93 for the
year 1942. This precipitous drop in construction
activity had an extremely depressing effect on the
composite index for 1943, or rather an exaggerated
effect on the index of 1942 ; for, if construction data
be omitted from both years the index for 1942 would
be 157.85 instead of 172.61, and the index for 1943
would be 171.76 instead of 171.66. It is seen that
while the omission of the data effects little change in
the 1943 index it pulls the 1942 index down by 14.76
percentage points.
CEMENT SHIPMENTS
Since cement shipped into the state is finally re-flected
in construction work, buildings, bridges, or
highways, it is given a weight of only 2.47 in the
computation of the composite index. In volume the
increase from 1942 was the greatest of any series
except sales of ordinary life insurance, 24.15 percent.
Monthly relatives, as in the case of construction, are
hardly significant, as large shipments may result in
a "carry over" rather than in current consumption.
Monthly relatives ranged from 349.19 in January
down to 131.44 in December, the combined index for
the year being 213.60, compared to 177.76 for 1942.
SALES OF ORDINARY LIFE INSURANCE
The sale of ordinary life insurance, which showed
a downward trend from 1923 to 1940, developed a
sharp upturn with the declaration of war, although
the 1943 index is only 18.88 percent above the 1935-
1939 level. Some improvement was shown as early
as 1939, but the index for the year was only 99.86.
Sales in 1943 exceeded 1942 by 29.45 percent, the
largest relative increase of any activity included in
the index.
DEPARTMENT STORE SALES
Since this index is based on a sample, and is com-puted
from monthly percentage changes, rather than
from actual volume, the activity is weighted only
2.74 in arriving at the composite index. Sales were
highest during June and July when the monthly
relatives reached 211.98 and 269.49 respectively. The
Page 42 THE U. C. C. QUARTERLY Spring, 1 944
combined index for 1943 is 176.49, or 37.12 percent
above the 1942 index of 128.71.
POSTAL RECEIPTS
Postal receipts in the seven cities whose banks re-port
through the Federal Reserve System increased
in 1943 over 1942 by 14.37 percent, or by $632,309,
and the 1943 index was 64.70 percent above the 1935-
1939 level and 18.65 percent above the 1942 index.
TEXTILES
The manufacture of textile products in North
Carolina accounts for the employment of 246,000
workers, or 72.0 percent of the total labor force of
the state classified in the 1940 census under manu-facture.
During the second quarter of 1943 employ-ment
in North Carolina textile plants accounted for
42.5 percent of all employment under the North
Carolina Unemployment Compensation Law, and 19.2
percent of the total labor force of the state reported
in the 1940 census. Including those who find employ-ment
in the growth and harvest of cotton, estimated
at 350,000, this industry contributes directly to the
earnings of approximately 50.0 percent of the total
labor force of the state, this notwithstanding the
cotton acreage has been reduced from 1,373,701 in
1919 to 710,228 in 1939 and production reduced from
858,406 bales to 458,146, a decline of 46.6 percent.
Acreage had increased in 1943 to 846,000, or near the
1919 level. Labor employed in the production of wool
is not included, although employment in textile
manufacture includes wool and worsted products, as
well as silk and rayon, which together employ 17,000
workers. Hosiery plants employing 52,000 workers
included in textile manufacture also use all three
types of materials. These statistics give special
significance to trends in textile production and em-ployment
because of their barometric value in gaug-ing
the general business level of the state.
Cotton textile activity in 1943 was slightly below
the 1942 level. The consumption of 2,789,998 bales
of cotton represented a decline of 3.84 percent from
1942, and the 1943 index of 168.88, base 1935-1939
average, represents a decline of 0.72 percent from
the 1942 index of 170.11. The national index of tex-tile
production for 1943, base 1935-1939 average, was
155 or 8.2 percent below the North Carolina index.
The outlook for 1944 is that cotton-fabric require-ments
for military use will remain at about the
present level, while woolen and worsted-fabric re-quirements
are expected to run about 60 percent as
much as in 1943. Production for civilian use is not
expected to increase because of restrictions, labor
conditions, and price ceilings.
An unofficial Washington estimate is that 40 to 50
thousand additional textile workers may be needed
for specialized production in 1944, but since the
number employed in North Carolina textiles during
the second quarter of 1943 was 20.5 percent in ex-cess
of the total 1940 inventory of North Carolina
textile labor, and many of these have since been in-ducted
into military service, it is not clear how any
material increase in textile employment in North
Carolina can be achieved.
Employment conditions in textiles appear on the
whole, to be satisfactory in North Carolina. Average
per capita weekly wages of textile workers covered
by the U. C. law have increased from 1940 to 1942 by
39.79 percent, compared to an average increase for
all covered employment of 36.18 percent. Recently
a North Carolina textile manufacturer who employs
more than 20,000 workers petitioned the Wage and
Hour Division of the U. S. Department of Labor for
a seven and one-half cent increase in the hourly
wage rate of all his employees.
GENERAL TREND
As may be seen from the chart, business activity
in 1943, as reflected by the indicators used in this
bulletin, was at a somewhat lower level than in 1942,
for which the decline in construction was responsible
to a considerable extent. The decline in textile pro-duction,
however, as reflected by a decrease in cotton
consumption of 3.84 percent and in spindle hours of
2.11 percent, while only a fraction of the decline in
construction, is more significant because of the
larger number employed and the tremendous invest-ment
in fixed assets. The 1935-1939 base index
dropped from 172.61 for 1942 to 171.66 for 1943, a
decline of 0.55 percent. The index based on 1913-
1939 trend dropped from 156.44 for 1942 to 150.59
for 1943, a decline of 3.80 percent. The former index
is adjusted only for seasonal movements and conse-quently
includes the trend increment. In the latter
index based on ratio to trend both seasonal and trend
increment have been eliminated so that the decline
of 3.80 percent more accurately measures the extent
of cyclical movements which are considered as in-dependent
of a normal trend.
The outlook for 1944 seems to indicate little
change from 1943. It seems probable rather that the
peak may have been reached in all the series repre-sented
except possibly trade which may be expected
to respond to any removal of restrictions or rationing
provisions with even greater increases in volume as
purchasing power accumulates. Many believe that
the business index will remain at a high level until
the termination of the war.
It may be of interest to observe the behavior of
the national business index during past wars. During
World War I the business index reached its peak in
1916 a year before we entered the war, from which
time it continued to decline although the deflationary
period did not set in until 1920. During the four-year
Civil War the business index reached its peak
during the early part of 1864, months before the
beginning of the deflationary movement, while in the
three-year War of 1812 the reverse was true, the
business index being at its highest levels during the
two years following the war and a year after the
deflationary movement began. If the experience of
the last two wars is repeated, it would appear that
the peak of the prosperity area has been passed
;
that we may expect a further decline and a sub-normal
condition following the termination of the
war, the depth of which will depend upon the degree
of inflation which is permitted during war no less
than upon the portent of our post-war foreign policy.
Spring, 1 944 THE U. C. C. QUARTERLY Page 43
An Explanation of The Word "Voluntarily
95
as Used In
Connection With A Disqualification for Leaving Work
By Charles U. Harris and Ralph Moody, Legal Department, UCC
A consideration of the shades of meaning of the
word "voluntarily" and related words such as "will"
or "volition" is far beyond the length and scope of
this statement. These concepts when pursued to
their logical ends would lead us into the province of
Conation in the field of Psychology and from this
point on we would soon find ourselves involved in
the endless struggle between the adherents of de-terminism
and libertarianism and finally we would
be lost in the chaotic void of Metaphysics.
The word "voluntarily" appears in the disqualifi-cation
section of the Unemployment Compensation
Law of North Carolina and is tied in with the phrase
"without good cause attributable to the employer."
Section 5(a) of the Act reads in part as follows:
"An individual shall be disqualified for benefits . . .
if it is determined by the Commission that such
individual is . . . unemployed because he left work
voluntarily without good cause attributable to the
employer. In applying this language to the situa-tion
where a worker has left his work and filed a
claim we must find, in order to disqualify such a
worker, that there must be : ( 1 ) a separation from
work; (2) the separation must be voluntary; (3)
the separation must be without good cause attribut-able
to the employer. It is hardly necessary to con-trast
or compare "good causes" and "bad causes,"
for if we assume the best "cause" in the world for
leaving work that cause must still be "attributable
to" or proximately linked with the employer before
the claimant can be relieved of the disqualification.
In other words the employer must be to blame for
the separation. It also follows that if any of the
conditions or situations enumerated above do not
exist then the disqualification is not applicable.
When is a separation from work "voluntary," and
when is a separation from work "involuntary," that
is without the "will" or "volition" of the worker?
Obviously a claimant forced or compelled to leave
his work by certain, definite, objective forces should
not suffer disqualification. It is necessary, therefore,
to give the word "voluntarily" a practical and equit-able
interpretation that will take into consideration
the interests of both the worker and the employer.
Like most questions of this nature we find that, "the
doctors differ," and the courts and administrative
agencies have expressed divergent views. In general
there are two attitudes toward this question and one
may be designated as a strict view and the other as
a liberal view. We now give an illustration of these
two points of view.
In the case of Department of Labor and Industry
of the Commonivealth of Pennsylvania, Appellant,
vs. Unemployment Compensation Board of Review;
U.C.I.S., Benefit Series, Vol. 2, No. 4, Case No. 1363
(1939), the facts were that the claimant had been
employed for about three years and ten months by
a dairy company to deliver milk on a milk route. He
separated from work because his physician advised
him to give up his position on account of a rheumatic
condition. He was experiencing severe pains in his
feet and legs, which were aggravated or increased
by being on his feet so much in the early morning
and jumping in and out of the wagon in all kinds
of weather, storms, snow, and rain, and by lack of
sleep. The Board of Review had held that the claim
was compensable and that the claimant left his work
"involuntarily," reasoning as follows
:
"To be voluntary, his act of leaving his work must have
been free from compulsion, and free from the influence of
any extraneous, disturbing cause. A voluntary act is the
antithesis of an act done under compulsion, coercion,
constraint, or objective necessity. The presence of any
physical force compelling the claimant to leave his work
would render his act involuntary and outside the provi-sions
of the Act relied upon by the Division. The require-ments
of the claimant's employment combined with his
physical condition compelled him to quit his work. There
is no more compelling motive for human action than the
preservation of physical well-being. The conditions com-pelling
the claimant to leave his work were not solely
subjective. The necessity of the claimant being on his
feet, so much jumping in and out of the delivery wagon,
and the exposure to all kinds of weather were objective
factors incident to his employment making it necessary
for him to terminate his employment."
The above quotation gives a liberal interpretation
of the word we are considering. On appeal, the
Superior Court of Pennsylvania did not agree with
this view of the matter and in giving a strict defini-tion
of the word "voluntarily" reasoned as follows
:
"The word 'voluntarily' may be used in a number of
different senses, but, in our opinion, having regard to the
purpose and intent of the act, considered as a whole, but
with special reference to its declaration of public policy
and its fourth article, which prescribes the qualification
required to secure compensation and enumerates the
causes which will make an employee ineligible for com-pensation,
the most appropriate meaning or definition is
'of one's own motion' (Century Dictionary); 'of one's own
accord' (Oxford Dictionary); 'acting of one's self (Web-ster's
New International Dictionary). When we say, 'He
left work voluntarily,' we commonly mean he left of his
own motion; he was not discharged. It is the opposite
of a discharge, dismissal or lay-off by the employer or
other action by the employer severing relations with his
employees, to provide against which the act was mainly
designed.
"This meaning of the term is easily applied, is of
general significance and obviates the necessity of an in-quiry
or examination into the mental processes of the
employee which led up to or brought about his resignation
or quitting work of his own motion, the result of which
might or might not be deemed voluntary as considered by
different persons, from different points of view, and thus
be variable and subject to no uniform standard. . . . Few
actions are taken in this world without some extraneous,
constraining or compulsive force or influence and to apply
such an uncertain basis to 'voluntarily leaving work,'
would be doing violence to the usual and ordinary mean-ing
of the term in the light of the purpose of the enact-ment."
The two quotations given above probably repre-sent
the major positions in regard to the matter
under discussion; there are, however, many varia-
Page 44 THE U. C. C. QUARTERLY Spring, 1 944
tions and combinations of these two positions as
will be shown by an examination of the cases report-ed
in the Unemployment Compensation Interpreta-tion
Service, Benefit Series.
On January 5th, 1944, the Attorney-General of
North Carolina rendered an opinion on this subject
and set forth the principles to be followed by the
Commission in applying this disqualification statute
;
under the law of our state this opinion is binding on
the agency and must be followed unless and until
it is modified or reversed by the courts. This opinion
is clear, workable and easy of application ; it draws
a clear line of demarcation between those cases in
which compensation should be allowed and those
where it should be denied. In his opinion the Attor-ney-
General emphasizes the fact that "involuntary
unemployment" is given as a reason for unemploy-ment
compensation legislation, as stated in Section 2
of the Act ; it is stated that illness and other causes
beyond control could result in involuntary unem-ployment
and benefits should not be denied after
ineligibilities have been removed. It will be seen
that the Attorney-General has followed the rule that
remedial legislation should be construed as far as
possible to alleviate the conditions that brought it
into existence; it would seem that the opinion justi-fies
the construction that the forces or compulsions
must affect the physical constitution of the worker
in a direct manner and must be of an impelling
character and should result in depriving the worker
of freedom of choice in the matter. All causes or
motives that operate indirectly upon the employee,
however strong, should be excluded from considera-tion.
We will now quote from the opinion as fol-lows:
"It is inconceivable to me that the General Assembly,
in enacting this beneficent social legislation intended that
a person who had left his or her employment on account
of illness, or other causes beyond control, would be con-sidered
as having forfeited the right to the benefits of the
Act when such person, upon removal of such causes, is
able and available for work but remains unemployed be-cause
of inability to find employment with his or her
employer or on other suitable employment. I, therefore,
am of the opinion that we would be justified in inter-preting
the word 'voluntarily' and the phrase of which
it is a part in such a way as to not deny the benefits of
the Act to those for whom it was clearly intended to help,
and this will result in what might generally be said to
be a liberal interpretation rather than a narrow one,
which has apparently been adopted in some jurisdictions."
"In adopting a liberal interpretation, however, I believe
that this interpretation should be confined to proper
limits in order to give effect to the express intention of
the General Assembly. In ascertaining whether or not
an employee left his employment voluntarily, I think we
would be justified in considering the mental processes,
constraining or compulsive forces or objective influences,
or the freedom or lack of freedom from external compul-sion
or necessity which led up to the claimant's leaving
work, but I think that the Commission should in every
case be fully satisfied that, where an employee has left
the employment, the reasons for so doing were of an im-pelling
character which, in the opinion of the Commission,
afforded ample and complete justification for the sever-ance
of his employment. This would exclude all fictitious
or feigned reasons or excuses for failure to continue in
the work and would comprehend only such causes as
operated directly on the employee which made, in the
opinion of the Commission, his continuance in the employ-ment
impossible, or attended with such circumstances as
to make it unreasonably burdensome for him to continue
therein."
"It seems to me that a cause which only indirectly
operated upon the employee should be excluded and that
the circumstances should be such as could reasonably be
considered to have deprived the employee of freedom of
choice in the matter. It is evident that the illness of an
employee of such a character and nature as to disable
him or her from continuing in the employment would be "
such a cause as to make it necessary for the employee to
discontinue his work as long as this condition existed.
On the other hand, I am inclined to the opinion that,
except under very unusual circumstances, an illness in the
family of an employee would not provide such a cause."
It is unfortunate that some of the newspapers of
the state misunderstood this opinion and carried
articles to the effect that the Attorney-General had
ruled that claimants would be paid unemployment
compensation benefits during periods of illness. In
fact the very opposite is true and the Attorney-
General expressly said so, taking great care to speci-fy
in his opinion that benefits could only be paid
"upon removal of such causes (illness), is able and
available for work but remains unemployed because
of inability to find employment with his or her em-ployer
or in other suitable employment." In the
United States, physical ability to work is a funda-mental
requisite of eligibility; unemployment com-pensation
has never pretended to compensate for
loss of earnings because of sickness, loss of health
or accidents.
If you have been interested enough to read this
statement up to this point, then we would like to
suggest the following situations and ask that you
apply the rule and arrive at your own conclusions
:
1. The claimant while about his work is sudden-ly
stricken with an acute illness and carried to the
hospital.
2. The claimant separates from his work after
an examination and advice from his physician that
he is suffering from pulmonary tuberculosis and that
if he continues to work it will eventually cause his
death.
3. The claimant separates from his work because
of injury due to an accident: (1) connected with his
work; (2) not connected with his work.
4. The claimant separates from work because of
a company rule which precludes continued employ-ment
upon marriage.
5. The claimant separates from work because
her car was destroyed by fire and she had no other
means of transportation to her work.
6. The claimant separates from his work for in-duction
into the armed forces: (1) after receipt of
official notification; (2) he received no official notifi-cation
but enlisted.
7. Claimant separates from his work because of
flood, tornado or act of God.
8. Claimant separates from his work because his
wife was dangerously ill and wanted claimant to
stay with her.
Materials shipped from some war construction
project in North Carolina may eventually be trans-ported
on the back of some native porter through
the trackless jungles of New Guinea or the scorch-ing
sands of the Sahara.
Spring, 1 944 THE U. C. C. QUARTERLY Page 45
Notes on UCC Operations
U. C. FUND HAS BENEFITED 300,
<
The unemployment compensation fund of North
Carolina celebrated its seventh anniversary in April
with a total of gross receipts through the 15th of
the month, of $100,000,000. Payments from this
fund, in the form of benefit checks to those entitled
to receive them, amounted to $25,000,000, leaving a
net balance available for the future of $75,000,000.
It is estimated that more than 300,000 North Caro-lina
men and women, temporarily without jobs, have
benefited from the program.
At the present time, with industrial war expan-sions,
labor replacements of workers now in military
service, etc., the active insurance accounts which
the Commission maintains for individual workers is
probably about 1,500,000. In other words, a million
and a half North Carolinians, because of payments
made by their employers to the Commission, have
a stake in the fund. This $75,000,000 represents
their insurance protection against post-war unem-ployment.
While it would be difficult to assign any special
date as the birthday of unemployment compensation
in this state, it has a history going back to 1933, the
first payments into the fund after the Commission
officially began operations in December 1936, were
received in April, seven years ago. Benefit pay-ments
began in January of 1938. From then on,
probably more than 300,000 individuals have shared
in the $25,000,000 paid out in benefit checks.
At one time in the history of the Commission, as
many as 140,000 jobless workers were drawing
benefit checks, but the claim load dwindled steadily
after this country embarked on war production. By
June of 1942, the number of unemployed had fallen
below any previous level, to an average of 7,000.
The number continued to decline, with almost every
month signalling a new low in unemployment,
through November of last year.
In that month, the number of unemployed, as
indicated by an average of less than 500 weekly ben-efit
checks paid through the state, probably touched
bottom. About half of the local employment offices
had been reporting no new claims.
The total amount of benefit payments for 1943
was $654,230.13. This was considerably less than
the $1,497,499.10 which was added to the fund by
the U. S. Treasury for interest earned during the
same period.
From last November through March, the claim
load increased, due primarily to seasonal lay-offs in
certain industries. In April, the average number of
weekly benefit checks was about 1,500. This still
placed the level of unemployment at slightly more
than half of what it had been a year ago, and about
one seventh of that recorded two years ago.
If the 1944 trend in claims and benefit checks fol-lows
the pattern of 1942 and 1943, which is probable
unless there is some change in the current employ-ment
situation, there should be a decline in numbers
through the summer and early fall months.
In the opinion of employment security adminis-trators,
in Washington and throughout the nation,
the adequacy of the unemployment compensation
program faces its first real test in the post-war
period. With its $75,000,000 reserve fund, and with
its major industries capable of re-conversion to
peace-time production within a comparatively short
time, judging by the speed with which these indus-tries
changed over to meet war production demands,
North Carolina is believed to be in a relatively fav-orable
position.
1942 SUMMARY OF OPERATIONS
Initial Continued Benefit
Month Claims Claims Checks Amounts
January . 23,565 82,984 57,979 $435,270.08
February . 9,316 59,334 48,737 357,875.90
March 6,504 55,014 46,031 343,120.93
April 6,923 49,595 39,148 291,771.07
May 5,248 41,892 36,331 265,719.15
June . 6,906 38,178 29,317 214,521.19
July _ 13,749 48,755 30,135 227,961.83
August . 7,462 38,157 31,609 247,576.03
September . 3,682 32,140 23,198 195,409.81
October .. 2,574 24,857 20,425 179,756.32
November 3,562 17,222 12,823 112,249.45
December 4,389 20,200 13,734 112,988.73
Total .. 93,880 508,328 389,467 $2,984,220.49
1943 SUMMARY OF OPERATIONS
Initial Continued Benefit
Month Claims Claims Checks
January 4,968 19,778 15,515
February 2,124 16,252 13,034
March .. 2,449 16.087 12,781
April „ 1,814 13,483 11,347
May 2,035 11,106 8,369
June 1,283 7,736 5,618
July 2,945 6,921 4,335
August 1,004 5,528 3,719
September . 976 4,098 2,627
October .. 621 2,637 2,231
November 1,023 2,793 2,121
December 1,744 4,476 3,151
Total 22,986 110,895 84,848
FOUR MONTHS OF 1944
Initial Continued Benefit
Month. Claims Claims Checks
January . 1.697 6,145 4,429
February 1,573 3,270 4,530
March 3,474 11,752 6,968
April 1,421 8,298 6,434
Amounts
$114,486.78
95,975.07
95,275.64
7S.799.53
59,924.17
42,280.25
36,444.01
32,902.72
25,689.13
24,207.00
21,787.73
26,458.10
$654,230.13
Amounts
$ 34,869.40
35,706.08
50,035.21
45.812.67
VETERANS URGED TO APPLY
FOR JOBLESS INSURANCE
The Unemployment Compensation Law of North
Carolina includes a special provision for workers who
enter and return from military service. Wage
credits established in their unemployment insurance
accounts while they were working during the two
years before entrance into the armed forces may be
brought forward and made available to them as
veterans during at least two years following return
to civilian life ; but only if each veteran files a claim
within six months of his military discharge.
To make the transfer of his previously earned
unemployment insurance credits, a veteran should
Page 46 THE U. C. C. QUARTERLY Spring, 1944
apply soon after his discharge from service to a
claims-taker of the Unemployment Compensation
Commission, or to an interviewer of the United
States Employment Service, at one of the local Em-ployment
Offices throughout the state.
Not all returning veterans will have wage credits
available for unemployment insurance. The only way
a veteran may determine the status of his account is
by filing a claim with the Unemployment Compen-sation
Commission.
According to W. R. Curtis, Acting Commission
Chairman, "Veterans should look to the future,
regardless of whether or not a veteran has occasion
to draw unemployment insurance benefits within the
six months following his discharge, or whether or
not he is able to work at the time of his discharge,
he should file a claim for unemployment insurance
during this six-month period. Only in this way can
a veteran's record of past earnings in insured em-ployment
be credited to his account for the future.
Otherwise he might forfeit his right to draw benefits
based on prior earnings, if later on he becomes un-employed
and eligible to do so."
"A special regulation has been adopted which con-tains
a statement of our policy for handling, the
cases of veterans who may happen to apply after the
allotted period of six months has elapsed. We do
not want any veteran to forfeit inadvertently his
future benefit rights in unemployment insurance by
failing to apply within six months of his military
discharge. Consequently, if the date on which a
veteran files is longer than six months after he left
the armed forces, this Commission, up to January 31,
1945, will still accept his claim, using the date of his
certificate of discharge by the Government as the
date of his application for unemployment compen-sation.
"However, all returning veterans should file claims
within the six-month period in accordance with the
Law's provisions, and we urge them to do so."
PAYROLL TAX REDUCTIONS
North Carolina employers will save close to two
million dollars in unemployment compensation taxes
this year. This sizeable tax reduction is made
possible by the plan of employer experience rating
which is a feature of the North Carolina law on
unemployment insurance, and 3,536 employers will
benefit from it in 1944—more than twice as many as
the 1,564 who did during 1943.
The Commission's estimated decrease in 1944 con-tributions
to the insurance fund, from 1943 receipts,
of $1,894,791.00, may be regarded as a saving to em-ployers
or as a loss in U. C. C. revenue, but either
way it must be good news to employers.
To a great many of those who have qualified, the
reduced rates which became effective the first of this
year will mean a saving of from twenty to about fifty
percent of what they would have been required to
pay under the regular unemployment compensation
tax rate of 2.7% of payrolls. Our state law and the
laws of some other states, as opposed to federal in-tentions,
provides for a lowered scale of tax rates to
those employers whose experience with regard to
unemployment is considered favorable—that is to
employers who over a period of years have built up
reserve account balances that meet certain standards.
The rating plan is an expression of one of the funda-mental
policies behind social insurance legislation in
offering an incentive to private industry to try to re-move
the cause of insecurity. It aims to put a
premium on the stabilization of employment prac-tices.
The Unemployment Compensation Commission
maintains over 10,000 individual employer accounts.
For purposes of employer experience rating, separate
branch office accounts are considered as one with
their home offices. Some 400 accounts were current-ly
inactive and 1,236 were found to be ineligible for
classification because of insufficient experience.
Computations made for the 7,938 active and eligible
employer accounts resulted in reduced rates becom-ing
applicable to 3,536, or nearly half of them.
The specific lowered rates which now apply to
1944 payrolls are as follows: The rate of 2.5% has
been awarded to 917 employers, and represents a net
saving of 7.5 percent from what their taxes would
be without experience rating. The rate of 2.13%
applies for 915 employers, saving them 21.1 percent
against the standard tax. 803 employers with a rate
of 1.76% will save 34.8 percent in taxes; 619 em-ployers
with a rate of 1.39%- will save 48.5 percent;
174 with a rate of 1.02%, will save 62.2 percent; 55
with a rate of 0.65% will save 75.9 percent; and 53
receiving the maximum allowed reduction with a rate
of 0.27% will save as much as 90 percent of their
taxes.
Over forty percent of North Carolina employers
covered by the Unemployment Compensation Law
have annual payrolls of between $10,000 and $50,000.
More than half of them will share the tax savings
under the 1944 rates, and the greater number of
them with new rates of 2.13%, 1.76%, and 1.39%
will net savings of from twenty to fifty percent of
taxes paid at the standard rate.
WAGE RECORD ACCOUNTING
Wage records of more than a million different
workers are going "through the mill" in the Com-mission's
central Raleigh office. The huge task of
handling these wage items showing earnings for a
quarter or half-year period, and crediting them to
individual worker accounts, is an important part of
the Commission's preparation for handling post-war
applications for benefits.
The payroll records containing these wage items
are received from 10,466 employers, who, generally
having eight or more employees, are covered by the
Unemployment Compensation Law. Since most wage
records are submitted quarterly, the Wage Records
Section of the Commission's Accounting Department
estimates that during 1944 it will handle well over
3,000,000 wage slips. Despite the size and growth
during these war years of the insurance load which
it is carrying, the Commission is operating under a
budget that is constantly being reduced.
Upon arrival of the wage reports in the Raleigh
office, a group of clerks verifies the wages as reported
Spring, 1944 THE U. C. C. QUARTERLY Page 47
for each worker with summary reports also sub-mitted
by employers, arranges the individual wage
reports in sequence according to the workers' social
security account numbers, and inserts individual
wage slips behind index cards in the Wage Record
Files. This is the process by which each individual
worker's account is credited with the amount of
wages earned, so that later the account may serve as
a basis for determining the amount of benefits a
worker is entitled to draw should unemployment
overtake him.
Several steps are necessary before the crediting
process is complete. The verifying clerk lists on an
adding machine for each employer the wages paid to
workers and checks it with the total as reported on
the Employer's Summary Report of Wages Paid. If
the totals are in agreement, the reports are initialed,
assembled, and routed to the sorting clerks. In
instances where the report is found to be out of
balance, a request is sent to the employer to make
the necessary adjustment. Then a sub-processing
group of clerks separates the individual wage reports
and regroups them for sorting by social security ac-count
numbers. This requires three sorting opera-tions.
The first two are done by hand, the third,
which involves a break-down by four digits, is per-formed
by a machine called a "Natsor." The piles
of wage slips, now sorted according to numerical
sequence, are next regrouped—with each series still
kept separate—according to the file of which they
are to become a part. There are three such files:
(1) Social security account numbers assigned in
North Carolina; (2) Social security account numbers
assigned in other states; (3) Alphabetical File for
workers whose reports do not show a social security
account number.
Any discrepancy found on a wage slip as to the
social security account number or the spelling of a
name, necessitates the removal of the slip for special
attention. Because of errors that are detected, the
Accounting Department sends out about 1,000 letters
a year, occasionally followed up by a call from one of
the Commission's
field representa-tives.
The total number
of names and num-bers
in all three files
of wage credit ac-counts
kept by the
Commission exceeds
two million, al-though
not all of
them are active at
the presen time.
Many workers are
no longer engaged
in insured occupa-tions,
many have
left the state, and
many are serving in
our armed forces.
Nevertheless all re-cords
are faithfully
kept from the time operations began in 1937, for it is
not known how many men and wmone in military
service will need to draw unemployment benefits
against wage credits established before they dressed
in uniform. The 1943 General Assembly granted
them the right to do this at any time within six
months after their return to civilian life, should they
be unable to find suitable employment.
When a claim is received, a worker's credit slips
are withdrawn from the Wage Record file. The
earnings listed for the appropriate base period are
then posted on a form known as an "initial determi-nation"
which many claimants have come to know,
since each one receives a copy of his own initial
determination. From the base-period earnings
shown, a claims examiner is able to calculate the
weekly benefit amount to be paid.
The money for benefit payments is withdrawn as
needed from the Unemployment Trust Fund. This
fund is built up by contributions from employers
;
there is no deduction from a worker's pay to support
it. At the present time the fund balance amounts to
something over $75,000,000, which is on deposit in
the United States Treasury, drawing interest from
Government securities.
Figures compiled by the Unemployment Compen-sation
Commission on wage items indicate the gen-eral
increase in the labor force in North Carolina as
a result of wartime activity. They involve only
industries in which workers are insured against the
risk of unemployment under the law, but they show
the general employment trend. The number of
workers for whom wage slips were processed by the
Commission in 1940 was 698,300. In 1941, wage
slips were filed in 814,666 accounts. And in 1942,
the first year of full war production, wage slips
credited as many as 1,061,332 workers with earnings.
The total for this year will be higher. At the end of
each quarter, mail sacks loaded with similar wage
reports pour into the Commission's offices.
Keeping up with this huge volume of wage records
is a large part of the Commission's responsibility in
getting ready to
meet whatever
claim load develops
when the war-time
pace of industry
slackens. In main-taining
this insur-ance
system for
workers against the
risk of losing their
jobs, the Commis-sion
is strengthen-ing
one of the guar-antees
already es-tablished
to the
Freedoms from
Want and from
Fear.
View of the Central Office of the Unemployment Compensation Commission —one row of the files of two million individual wage records used to deter-mine
amount of benefits to which unemployed claimants may be entitled.
Of course not all
the people who may
suffer from unem-ployment
in the
Page 48 THE U. C. C. QUARTERLY Spring, 1 944
post-war period of readjustment are protected by
the program. Workers for small business concerns
and in several classes of occupations are not now
covered by the law. It is, however, a source of real
satisfaction to know that somewheer between one
and two million North Carolinians have rights in a
growing insurance fund of over 75 million dollars
being set aside for them against the rainy days of
unemployment.
ANALYSIS OF EMPLOYERS
COVERED BY U. C. LAW
Under this same title, an article was published in
the March 1944 issue of Employment Security Infor-mation,
the Commission's former monthly publica-tion
to which the U. C. C. Quarterly is successor.
This article was based on an examination of employ-ing
units subject to the state unemployment com-pensation
law in January, 1940, classified by size,
that is, by the number of workers employed.
A similar analysis of covered employers reporting
for the fourth quarter of 1942 has now been made.
It was thought that a comparison of the two studes
would, to some extent, reflect industrial expansions
due to war production. The accompanying table
shows the distribution of workers and wages among
employers at the beginning of last year.
MONTHLY EMPLOYMENT, WAGES AND CONTRIBUTIONS,
BY SIZE OF FIRM, FOURTH QUARTER 1942
Size op Firm bt
Number Employer
Number
of Units
Average
Number
Employed
Percent of
Total
Employed
Average
Monthly
Wages
0- 7 2,989
4,097
1,386
487
277
275
148
118
208
120
35
12
16
7
3
3
12,493
61,116
50,108
30,342
23,284
33,006
25,605
26,923
70,900
79,742
42,911
21,285
38,986
23,942
13,302
51,813
2.06
10.09
8.27
5.01
3.84
5.46
4.23
4.44
11.71
13.17
7.08
3.51
6.43
3.95
2.20
.00
8.55
St 1,812,823
8- 24 6,785 585
25- 49 5.165,007
50- 74 3,192,143
75- 99 2,394,291
100- 149...
.
3,449,051
150- 199... 2,683,891
200- 249... 2,651,772
250- 499... 7,572 212
500- 999. .. 8 732 760
1,000-1,499 5,324,745
1,500-1,999 2,647,509
2,000-2,999 4,703,942
3,000-3,999 2,759,173
4,000-4,999 1,929,778
5,000-5,999
10,000 and over 7,480,130
Total 10,181 605,848 100.00 J 69,284,812
This more recent analysis of 1942 reports is based
on a total number of employing units that is greater
than the total of those studied in 1940. However,
because of statistical differences, and because of the
more or less constant turnover in active employer
accounts, the larger figure may not be taken as an
absolute increase in the number of covered em-ployers
during the intervening period.
Although the round number figures for employers,
workers and wages are not exactly comparable, dif-ferences
between the 1940 and 1942 studies do indi-cate
important increases in each category. What is
most significant is their relative proportions.
_
As between 1940 and 1943, the relative distribu-tion
of workers and wages by size of firm shows
interesting changes. There has definitely occurred
a greater concentration of workers, and a still higher
proportion of total wages paid, among the state's
largest firms—those with more than 500 employees.
It is now the case that two percent of the businesses
are in this category. These large firms employ 45
percent of all workers and pay 49 percent of all
wages.
The greatest relative gains occurred in the group
of employers having 3,000 to 3,999 workers, for
which employment multiplied more than six, and
wages more than eight times.
PERCENTAGE OF TOTAL IN SPECIFIED CLASS
Number op
Workers Employing Units Workers Wages Contributions
1940 1942 1940 1942 1940 1942 1940 1942
Under 50..^ 84.93 83.22
6.60 7.50
7.02 7.35
1.45 1.93
22.60 20.42
9.09 8.85
31.07 25.84
37.24 44.89
24.80 19.85
8.91 8.07
28.46 23.61
37.83 48.47
24.83 18.39
8.92 7.69
28.39 23.57
37.86 50.35
50-99
100-499
500 and over. . .
Total 100.00 100.00 100.00 100.00
The observable growth of larger firms, of course,
means that lesser proportions of business units,
workers and wages, appear for the smaller estab-lishments.
(See table.) But this does not mean
that smaller firms have been shrinking while the
larger ones have been growing, merely that the
growth of large plants has been proportionately
much greater. Actually, smaller businesses too have
been expanding. A recent check of wage reports for
the fourth quarter of 1943, reveals an additional
1,067 employers now having more than 50 workers
on their payrolls, who in 1940 were either not cov-ered
employers or did not carry so many employees.
The greater concentration of employment among
the state's largest industries which is demonstrated
by the 1942 analysis, reflects a significant economic
development for North Carolina. If it is due pri-marily
to war production increases in payrolls,
rather than, in a large part at least, to the more
normal course of industrial expansion which has
been taking place throughout the state for many
years, the question arises as to whether the larger
businesses will hold their gains and continue to in-crease
after the war.
U. C. C. DENIES BENEFITS
TO 619 COOLEEMEE WORKERS
A decision reached by the Unemployment Com-pensation
Commission, and handed down on Feb-ruary
25th, affected some 619 claimants as employees
of the Cooleemee plant of the Erwin Cotton Mills
Company. While this decision follows earlier
precedents, it breaks new ground in this particular
case in denying benefit payments to the claimants
because of their relation to a labor dispute which was
found to be the cause of their unemployment.
The Unemployment Compensation Law carries a
provision that disqualifies a claimant for benefit pay-ments
when it is found that his unemployment is
due to a stoppage of work which exists because of
a labor dispute, unless he can show that he is in no
way directly interested in the dispute and does not
belong to a grade or class of workers some of whom
Spring, 1 944 THE U. C. C. QUARTERLY Page 49
are participating in or have an interest in the
dispute.
. The claims of the 619 Erwin Cotton Mills em-ployees
were filed with the Commission's representa-tives
in May 1943, following a work stoppage which
began on May 6th. Initial determinations by the
Claims Deputy made on the basis of hearings and
recorded evidence were appealed. The issue was
removed to the Chairman of the Commission for a
further hearing and final disposition.
One of the pertinent factors in the case was that
the Textile Workers Union of America, Local No.
251, was recognized as the sole bargaining agency
for all of the employees and claimants concerned, on
the basis of an election under the National Labor
Relations Act and a contract with the employer.
However, the Union in this instance had in no way
sponsored the labor dispute which arose on May 6th
with the refusal of certain of the mill employees to
continue work.
The decision of the Commission denying benefits
to the Erwin claimants is a thoroughly documented
report of some twelve pages. The denial of unem-ployment
insurance payments rests on the applica-tion
to the facts in the case, as brought out by the
evidence, of established definitions of "labor dis-pute,"
"stoppage of work," "participating in,"
"directly interested in," "grade or class," etc. The
Commission found that, as the employer's plant con-stituted
a complete unit of operation, hindrance of
work in one department was responsible for the in-terruption
of work in others. Because all these em-ployees
had only one working agreement with the
company, and one bargaining agent, and homogeneity
of work, they must be considered as all belonging to
the same grade or class of workers. Therefore not
only are the particular employees who precipitated
the labor dispute disqualified from benefits, but like-wise
all other employees in the plant. Though en-gaged
in work in other departments, claimants must
be considered as interested parties by virtue of their
belonging to the same grade or class as the active
disputants, since they are all represented by a single
bargaining agent, and since they are engaged in
chain production.
The Commision's statement at the close of the
decision reads as follows: "It may be that most of
the employees in this mill or plant did not want this
strike, did not participate in any way or manner in
this labor dispute, and, therefore, these employees
feel that they are entitled to benefits. To these em-ployees
it may seem that this decision which deprives
them from benefits is based upon technicalities,
specious reasoning, and distinctions without differ-ences.
These employees must remember, however,
that the Unemployment Compensation Commission
can arrive at no other decision if it is to preserve its
neutrality in disputes of this nature. The Legis-lature
of the State has not delegated to the Unem-ployment
Compensation Commission the right to
pass upon the merits or demerits of labor disputes
and the funds handled by the Commission, paid in
by the taxpayers of the State, cannot be used to
promote strikes or to reward strike-breakers, or to
reward those who do not wish to participate in labor
disputes. These claimants must also remember that
they have voluntarily availed themselves of the law
which gave them unified action under a single agent
known as a bargaining agent. There is no criticism
of these claimants because they availed themselves
of this privilege, but claimants cannot claim the
privilege of unified and concerted action for one pur-pose
and then in the same breath contend that they
are not bound by the acts and conduct of a minority
group which is a part of their organization. The
disadvantages of organized action must be accepted
as well as the advantages."
•
VOLUNTARY CONTRIBUTORS TO
EMPLOYER RESERVE ACCOUNTS
The Unemployment Compensation Law of North
Carolina contains a provision, with regard to em-ployer
experience rating, for voluntary contributions
to the insurance fund. Employers may make volun-tary
contributions to their reserve accounts. It is
conceivable that voluntary contributions might
bring the reserve balance up to such a point as to
entitle the employer to a reduced rate or a further
rate of reduction. Of course, it would be necessary
for the employer to weigh the voluntary contribu-tions
against possible savings from a reduced rate.
Voluntary contributions must be made prior to the
computation date (July 1 of each year) on special
forms prepared by the Commission.
The table below indicates the number of firms
which have taken advantage of this feature of the
North Carolina law.
No. of employers No. of employers
as of June 30, 1942. as of June 30, 1943.
Industry Group Applies to tax rate Applies to tax rate
for 1943 for 1944
Building construction
gen'l contractors - 1 1
Textile Mill Products 4* 3
Furniture & finished
Lumber products _._ 1
Paper and allied products 1
Printing & publishing 2
Chemicals 1
Trucking & Warehousing 1 2
Wholesale trade _ 2 1
Retail trade
—
gen'l merchandise 1
Retail trade—misc. 1
Insurance carriers 1
Total 12 11**
Amounts _ __$392,517.00 $147,381.95
Note: The Unemployment Compensation Law forbids the
publication of information which identifies any in-dividual
employer.
*Three textile mills made voluntary contributions of $50,-
000, $80,000, and $100,000 respectively. As a result, each
received a reduced tax rate for the following calendar year
of 1.0 2 percent of payroll. This is a saving of 6 2.2 per-cent
from tax payments under the standard rate of 2.7
percent.
**A11 of these 11 employers are now paying 1944 payroll
taxes at reduced rates. Five of them, by making such
voluntary contributions in 1943, raised the balance in
their reserve accounts sufficiently to entitle them to the
maximum tax reduction. These five are paying the tax on
19 44 payrolls at the minimum rate of .27 percent, which
represents a saving of 90 percent of their tax if paid at the
standard rate of 2.7 percent. The voluntary contribution
made by one retail merchant reduced his tax all the way
from the maximum to the minimum rate. For one of the
textile manufacturers, the tax saving is estimated to be
more than twice the amount of the voluntary contribution.
Page 50 THE U. C. C. QUARTERLY Spring, 1 944
The Unemployed
The few unemployed who remain as claimants of
unemployment insurance funds represent special
problem cases. One of the most vexing problems
has been that of the in-migrant army wives who
locate in towns and cities near the camps and apply
for work and unemployment compensation through
the local offices, filing claims against wage credits
earned in other states.
Several studies have been made- by the Commission
to determine what type of workers are still without
jobs these days. A 1943 survey of 916 unemployed
claimants indicated that 97 percent of them were in
non-critical occupations, 90 percent were married,
70 percent were white, 63 percent were women, 45
percent had dependents, and 19 percent were from
outside the state. Most of them were semi-skilled
or unskilled workers, and presumably the large pro-portion
of married women with dependents restricted
the possibilities of transferring them to job openings
outside their own communities.
The case of any claimant who refuses an offer of
work is carefully investigated by one of the Com-mission's
claims deputies. Three-quarters of all
initial claims are currently being referred to the
deputies for special examination.
The problem of the army wives who come into
North Carolina to be near their husbands here in
training, and who report themselves as unemployed,
lies in the reluctance of local employers to take on
women who may shortly want to move on again,
should their soldier husbands be transferred else-where.
Among North Carolina workers registering unem-ployment
claims, it is to be expected that a large
number of them will be from the textile manu-facturing
industry which employs a little less than
half of the state's workers covered by the insurance
program. However, an analysis of benefit payments
by industry of last employer, covering the second
quarter of 1943, assigned only a quarter of the
28,917 payments made to textile manufacturing.
Furthermore, only 2,627 of these payments were
made to workers formerly engaged in tobacco pro-cessing
and as few as 246 to those from the furniture
industry.
On the other hand, a large proportion of the pay-ments—
13,268 in number—were made to workers
who had been engaged in wholesale trade, particu-larly
wholesaling in cotton and tobacco products.
The active file of claimants in offices in the eastern,
central, and far western parts of the state for one
week when only 477 jobless workers were drawing
insurance, reveals the kind of unemployment prob-lems
which still exist. Most of the men are elderly,
probably too old to be retrained, and have always
worked at some specialized task such as sawfiling,
bricklaying, timekeeping, or bookkeeping, for which
there happens to be no call in the area where they
live. Most of the women are textile workers from
various operations and shifts on which they are not
currently needed. Age, physical handicaps, trans-lnformat!
on obtained from analysis of the active
File of Claimants for Unemployment Compensation
Number Number
LOCAL Claimants Where Occupation of Reason Given Placement
OFFICE in Active Disability Claimants for Claimant's Problem
File* Mentioned Unemployment
Asheville 32 8 Bookkeeper
Twisting
Illness No work avail-able.
Operator Illness Not able to work.
Cloth Folder Illness Needs light
work.
Flatwork feeder Illness Not employable
Carpenter Con-struction
No work Feeble
Audit Clerk
Hotel Disability Feeble
Thrower II Disability Able to do light
work
Instrument man Illness Breaks out with
poison ivy
when hot
Albemarle 15 3 Steam shovel Illness Held able—age
Seamer Illness Child restricts to
first shift
Labor Illness Referred to job
as watchman
Concord 19 1 Seamer Quit Poor health First shift only
Durham 38 3 Laborer helper Illness Bad ankle
Hotel Mgr. Illness Age and health
Civil Engineer Illness Work dull
Elizabeth City 9 1 Janitor Illness Age—no jani-torial
work
Goldsboro 6 1 Ammunition
weigher Quit—health
Greensboro 41 1 Battery Filler Illness Pending Com-mission
deci-sion
on appeal
Gastonia 5 5 Frame hand Illness Physical Condi-tion
limited
availability
Gateman Discharged Physical condi-tion
Watchman Illness Physical condi-tion
Foreman Con-struction
Illness Physical condi-tion
Textile Supt. Illness Physical Condi-tion
Hickory 5 1 Spinner Textile Sickness No openings
High Point.... 46 7 Ripsaw operator Illness Not able to work
Frame hand Illness Not physically
able
Winder Tex. Illness Very little de-mand
Winder Tex. Illness Very little de-mand
Inspector
Hosiery Illness Very little de-mand
Shaper wood Injury Handicapped
Molder wood Illness Age
Kannapolis 11 7 Spinner Tex. Disability Leg
injury
Loom Fixer Sickness Exhausted bene-fits
Oiler Sickness Able to do light
work
Guide rail cleaner Sickness Dust and Atmos-pheric
Stretcher Tex. Sickness Availability
limited
Oiler Tex. Sickness Age
Elevator
Operator Physical Disa-bility
Availability
limited
Roanoke
Rapids 10 2 Supply clerk
Tex. Sickness Physical Handi-cap
Quiller Tex. Sickness
Total 237 40
As of day survey was made.
Spring, 1 944 THE U. C. C. QUARTERLY Page 5
1
portation difficulties, and the impossibility for some
of night-shift work, all figure as reasons why these
unemployed are not soon rehired. Many of the
applications being received for unemployment bene-fits
are from workers who were discharged because
of illness. As long as they remain too sick to work,
the law disqualifies them from receiving insurance
checks.
Disability Insurance1
By Barkev S. Sanders, Chief, Division of Health and Disability Studies, Social Security Board"
NEED FOR DISABILITY COMPENSATION
In reviewing the need for disability compensation
as an integral part of our protection for workers
against the major economic hazards of life, the risk
of disability may be compared with that of unem-ployment.
The nature of the two risks. Disability, like un-employment,
deprives a worker of his earnings.
When his job stops, the able-bodied worker can often
cut down his expenses but the disabled worker com-monly
faces increased expenditures for necessary
medical services, hospitalization, and other auxiliary
and related services and commodities. He is thus
exposed to double jeopardy—not only loss of income
but also new and burdensome expenditures against
which he seldom can protect himself through indi-vidual
budgeting. For an individual or a family,
disability is not a predictable risk. None of us knows
whether or not he will suffer disability in the ensuing
12 months, or the duration of such disability, if it
comes, or the financial burdens it will bring.
Disability presents a more serious threat to the
economic independence of workers and their families
than an equivalent period of unemployment. The
disabled worker is in even greater need of protection
than the unemployed worker. Without comple-mentary
provision for disability insurance, our
present unemployment compensation insurance pro-gram
presents an anomaly in that the unemployed
insured worker loses unemployment compensation if
he is doubly unfortunate in becoming disabled as well
as unemployed.
The relative 'prevalence of disability and unem-ployment.
It has been estimated that on an average
day there are some 3.5 million persons who, but for
their disability resulting from disease or injury,
would be at work or seeking work. The actual num-ber
so disabled on a day will seldom, if ever, vary by
more than 20 percent from the average of 3.5 million.
Therefore, according to the season, the prevalence of
epidemic diseases and similar factors, probably from
3 to 4 million persons (6 to 8 percent of the labor
force) are unable because of disability to work or to
look for work on a given day.
i Readers are referred to the Pall-Winter 1942 issue of the
U. C. C. Quarterly (pages 38-43) where this same topic was
discussed historically under the title of Compulsory Health
Insurance.
- This article is taken from an address delivered by Mr.
Sanders at the Interstate Conference of Employment Se-curity
Agencies, Louisville, Ky , on October 20, 1943. Atten-tion
is called to a study
—
The Prevalence of Disability
Recorded Through Four Monthly Sample Surveys—by
Barkev S. Sanders and David Dederman, published in the
Social Security Bulletin for August, 1943.
The prevalence of unemployment has varied widely
in recent years. According to the most recent esti-mate
by the Census Bureau (September 1943), the
unemployed numbered 800,000 or about 1.5 percent
of the labor force. In July 1940, on the other hand,
nearly 12 times as many persons—9.3 million—were
jobless. In 1932-33 the unemployment figures were
much higher. The best available estimate indicates
that in 1933, manufacturing workers lost on the
average 40 percent of their regular working time
through unemployment.
Thus in years of extensive unemployment the
volume of unemployment may greatly exceed the
volume of disability. In years of reasonably goo'd
employment, such as 1941, the prevalence of these
two risks may be about equal, while in boom years,
such as 1942 and more particularly 1943, the volume
of disability may considerably exceed that of unem-ployment.
If the risks of disability or of unemployment were
evenly divided among all persons in the labor force,
the economic consequences would not be very serious.
Concentrated on the relatively few who actually lose
a job or become disabled, the impact may be dis-astrous.
The frequency of occurrence. Among 1,000 per-sons
in the labor force, about 600, on the average,
will be disabled for a day or more during the course
of a year, and these 600 will suffer at least 1,000
spells of disability. Some 200 persons out of each
1,000 are disabled for more than a week during a
year, and in the year there are about 250 spells of
disability of such duration per 1,000 persons in the
labor force.
The frequency of spells of unemployment varies
widely at different times and from place to place. It
is estimated that for each 1,000 workers in the labor
force in 1940, there were some 300 spells of unem-ployment
lasting a day or longer. Spells of un-employment
lasting more than a week numbered
about 250 per 1,000 persons in the labor force
—
approximately the same number as that estimated
for spells of disability lasting more than a week.
Duration patterns. A distribution of spells of
disability lasting more than a week and of similar
spells of unemployment in, say, 1940 shows approxi-mately
the following pattern:
Spells of—
Disability Unemployment
More than 1 week 1,000 1,000
More than 2 weeks . 650 840
More than 3 months 100 220
More than 6 months 40 100
More than 12 months 25 40
Page 52 THE U. C. C. QUARTERLY Spring, 1 944
When longer periods of time are considered, the
portion for disability eventually overtakes and ex-ceeds
that for unemployment.
In 1940 the volume of unemployment was about
twice the volume of disability in terms of all dura-tions
exceeding a week but not a year. The threat
of unemployment to economic security is not, how-ever,
twice that of disability, since disability entails
not only loss of income but also additional expendi-tures
for medical care.
Disabality as a cause of dependency. Many
studies made during the last half century have
shown repeatedly that sickness and disability consti-tute
the most important single cause of dependency.
Only in years of widespread unemployment does the
contribution of sickness and disability to dependency
drop to second place. Today, sickness and disability
are probably responsible for about three-fourths of
existing dependency as judged from past studies.
Historically, other than in the United States,
social insurance protection against the risks of disa-bility
invariably antedated or accompanied provisions
against the risks of unemployment. I believe that
the United States is unique among the nations in
having general unemployment insurance without a
corresponding system of compensation for disability.
This gap in our social insurance program ought to
be closed if we are to provide reasonable protection
against economic insecurity.
SPECIFICATIONS OF A TEMPORARY
DISABILITY COMPENSATION PROGRAM
Coverage. Protection against the risk of tem-porary
disability should be extended to all wage
earners and salaried workers. It cannot be extended
so readily to the self-employed. For the self-em-ployed
definite evidence of income loss because of
disability is often problematic and it is difficult to
establish the amount of such loss. Coverage should
be identical for temporary disability and unemploy-ment
in order to avoid completely any gaps in pro-tection
and to eliminate any possibility of selection
by workers of one benefit as against another.
Qualifying requirements. The object of tempor-ary
disability compensation is to compensate workers
for part of the wage loss resulting from disability.
Therefore, only those who depend on their earnings
can be considered eligible for these benefits when
their earnings cease because of disability. A
worker's eligibility for temporary disability must
depend upon evidence that he is more or less regu-larly
a member of the labor force. This evidence may
be established on the basis of some minimum earn-ings
such as to give evidence of attachment to the
labor force within a designated period of time pre-ceding
the claim. The eligibility requirement for
temporary disability will thus be similar to that for
unemployment compensation. In a coordinated
social insurance system the requirements should be
identical, so that workers who met the earnings
qualification for the one benefit would ordinarily
qualify also for the other, and hence would have no
incentive to claim sickness benefits when unemployed
or unemployment benefits when sick.
Definition of compensable disability. What should
be the test of compensable disability? Should a
carpenter who has injured a hand (assuming this
injury was not in the course of his occupation) be
eligible for compensation, even though he is able to
undertake other work which does not require the use
of his injured hand? A restrictive definition of
compensable disability which declared him ineligible
would create undue hardship. It would be unreason-able
to require workers to take up new occupational
pursuits when their disability is of a temporary
character. Even when early recovery is not certain,
it is socially desirable and administratively sound to
compensate all disabilities which make it impossible,
or injurious to health, for workers to continue in
their current and—in the case of the unemployed
—
in their most recent or customary—occupation.
Certification. Certification of disability by a
qualified medical practitioner should be a requisite
for all claims. As a routine, such certification must
be required with each weekly claim for compensa-tion.
Since effective certification of disability by a
qualified physician is the cornerstone of a well-managed
disability compensation program, the
requisite administrative arrangements for it will be
considered subsequently in greater detail.
Rate of benefit. As in the case of qualifying re-quirements,
it is desirable that the benefit amount
for unemployment and for sickness be the same, in
order to minimize any tendency for individuals to
claim one set of benefits in preference to the other,
thus placing additional burdens on the administrators
of these programs. Consequently, even though dis-abling
sickness causes a greater drain on the eco-nomic
resources of the worker, it is inadvisable for
cash benefits in temporary disability to exceed those
for unemployment. The additional risk of medical
expenses should be met by appropriate insurance
provisions for medical care rather than by more
generous cash disability benefits. Since the costs of
medical care are highly variable, the worker will
furthermore be much more adequately protected by
such an arrangement.
It is, of course, impossible to be sure that the
individual worker will receive sickness and unem-ployment
benefits of the same amount unless the two
systems are coordinated. However, the amounts will
be more nearly alike under separate systems if the
benefit formulas which are used follow similar
patterns. There would probably be no disagreement,
in this group, that benefits which are too small to
provide even subsistence are inconsistent with the
purpose and objective of social insurance. The
minimum benefit for those who qualify might well
be the same for sickness as for unemployment bene-fits.
It is also necessary to have a maximum ; the
object of social insurance is to provide basic pro-tection.
It is particularly important in the case of disability
to assure that the benefits are not so attractive as to
discourage the incentive to work. To meet this
criterion and at the same time avoid the payment of
benefits so small that they utterly fail their purpose,
(Continued on Page 58)
Spring, 1 944 THE U. C. C. QUARTERLY Page 53
North Carolina Plants Continue to Win Awards
The Army-Navy "E" and the Maritime "M"
awards won by the firms named in our Honor Roll,
have been given for outstanding production of the
materials demanded by war. The plants above which
award pennants fly should be viewed by all North
Carolinians with special pride.
To flags which have flown six months or longer,
stars are now being added as testimonials that the
plants are equalling or exceeding the record made in
winning the original penants. All initial awards are
reviewed periodically to determine whether a service
star is likewise due. A decrease in production
standards due to a situation within the control of
plant personnel, either management or labor, could
bring withdrawal of the pennant.
In the case of each award, excellence in the quality
as well as the quantity of production, rather than the
size of an establishment, are decisive. Careful
surveys of factors which are considered essential to
"Excellent" production are made by government
authorities. When a survey is favorable, the plant is
nominated for approval as a winner. The basis on
which surveys are made includes an examination as
to the kind and amount of production on war con-tracts,
the ratio of such war production to other
output, and the quantity produced in terms of avail-able
facilities. Weight is given to a plant's demon-strated
ability to overcome such obstacles as con-struction
changes, material shortages, maintenance
of equipment, and the shift from civilian to war
production.
The character of a plant's industrial relations are
also studied. Are fair labor standards in practice?
Are living and working conditions such as to attract
and hold the best workers and reduce labor turn-over?
By what means is the employee complement
kept full at all times ? Full operation of a plant is of
first importance and requires a training program for
honor Roll—North Carolina firms Which Have
Won War production Awards
COMPANY Place Date Product
ARMY-NAVY "E"
"'Chatham Manufacturing Co__ Elkin August, 1942 Blankets
"Cramerton Mills . September, 1942
Cloths
"P. H. Hanes Knitting Co Winston-Salem November, 1942 Underwear
Engines
Carolina Aluminum Co. _ Badin November, 1942 Aluminum
'National Munitions Co Carrboro January, 1943 Ammunition
J. A. Jones Construction Co._. Charlotte March, 1943 Camp Mackall
"Wright's Automatic
Durham April, 1943
ments
lily the Brothers Co April, 1943
Goode Construction Co Charlotte April, 1943 Camp Lejeune
April, 1943
April, 1943
Camp Lejeune
Barnhardt Manufacturing Co. Charlotte Textiles
•Revolution Cotton Mills
(Cone). Greensboro May, 1943 Textile products
'Proximity Manufacturing Co.
(Cone).. . Greensboro May, 1943 Textile products
Marshall Field & Co Sprav August, 1943 Woolen goods
North Carolina Finishing Co.. Salisbury March, 1944 Textile products
Firestone Cotton Mills. . .. Gastonia March, 1944 Textile products
U. S. Rubber Co.... April, 1944
MARITIME "M"
"""North Carolina Shipbuilding
Co Wilmington August, 1942 Cargo vessels
Also has Merit-Eagle Pennant
'(Stars awarded for continous meritorious production.)
some labor replacements, conducted in such a way
that it does not slow down production.
Plant management is accredited in proportion as
there is evidence of cooperation among its own de-partments
as well as with the Government's pro-gram.
Is management deficient in any respect, or
has it done everything possible to increase produc-tion
and decrease cost?
The extent of a plant's provisions for the safety
and health of its working force is also an important
Various persons who took part in the North Carolina Finishing Co. award program heard Governor J. M. Broughton of
North Carolina, as master of ceremonies, open the program. Illustration reproduced through courtesy of Textile Bulletin.
Page 54 THE U. C. C. QUARTERLY Spring, 1 944
Worker carefully stacks some of the thousands of shining
shells prior to shipment to the fighting fronts. Official OWI
Photo by Ank Rosener.
factor in these awards. Accident records, sanitation,
and protective measures in use for safeguarding
health are all considered.
War production awards are not lightly bestowed,
but have been truly and well earned by those who
receive them. They are real badges of merit.
U. S. RUBBER CO.
Announcement was made in March, 1944, that the
shell-loading plant of the U. S. Rubber Company
which was built in Charlotte—construction began in
the summer of 1942—has already won an "E" award
in the relatively short time it has been operating.
Presentation of the award took place in April. A
feature of the occasion was an address by Rear
Admiral George F. Hussey, Jr., Chief of the Navy
Bureau of Ordnance to the thousands of war workers
gathered for the ceremony.
WRIGHT AUTOMATIC MACHINERY CO.
A second star was added this April to the Army-
Navy "E" pennant flown by the Wright Automatic
Machinery Co. of Durham. The Wright plant re-ceived
its original award "for excellence in per-formance
of war production" in April 1943. A first
star was added in September, 1943, and the second,
star in April, 1944.
The Wright Automatic Machinery Co. is making
fire control instruments for the U. S. Navy. Con-struction
of the present modern plant was under-taken
in September 1941, for the purpose of making
Automatic packing machinery. Six months later it
was in production—turning out the tools of war.
Sharing in the Wright award are about 1,000 care-fully
trained workers.
Looking beyond its present war production, the
company intends in peacetime to return to its-original
plan of manufacturing packaging equipment.
Presentation ceremonies of the "B" pennant to the Wright
Automatic Machinery Company in Durham.
Employes of the Wright Automatic Machinery Company greet
the news of their first Army-Navy "E" award.
Spring, 1 944 THE U. C. C. QUARTERLY Page 55
FIRESTONE COTTON MILLS
The Gastonia plant of the Firestone Cotton Mills
celebrated its award of the Army-Navy "E" in
March. Taking part in the ceremonies were Russell
Firestone representing the parent company, the
Army and Navy representatives, Governor J. M.
Broughton, Mr. Harold Mercer, Vice President and
General Manager of the Gastonia plant, Mr. Nelson
Kessell, plant Superintendent, Mr. W. A. Karl, Vice
President in charge of textile manufacturing, and
five workers chosen to represent the others. Master
of ceremonies was Mr. Hugh James, Voice of Fire-stone
radio announcer. The Firestone plant, with
some 2,000 employees, makes tire cord fabric.
NORTH CAROLINA FINISHING CO.
The "E" flag was presented to the finishing com-pany
at ceremonies in Yadkin in March by Col. T. W.
Jones of the Philadelphia Quartermaster Depot,
representing the Army ; while "E" pins, which each
worker is entitled to wear, were presented to Clifford
Myrick, Laura Walser and Reuben Walser on behalf
of the others, by Capt. W. S. Popham in charge of the
Naval ROTC at Chapel Hill, representing the Navy.
Five workers were chosen to accept the "E" award for the
Firestone workers as a whole. Appearing from left to right
are Private Robert Williams, former Firestone employee,
wounded overseas and now convalescing at a Government
Hospital, who came to pin badges on the workers; Ben Davis
from the Carding Department (son in Navy); Mrs. Mattie
McDanie from the Spinning Department (three sons in
service), who has not missed a single day's work since Pearl
Harbor; Mrs. Bessie Gaines of the Spooling Department (two
sons in service); Mr. Carmer Little of the Mechanical Depart-ment;
and Mr. Mayberry Prince (not in picture) of the Weav-ing
Department.
THE EDWARDS CO.
The Edwards Division of the Deisel Engine and
Aircraft Corporation, located in Sanford, has also
been awarded the Army-Navy Service Star for
"meritorious services on the production front," in
addition to the pennant which the company was
already flying. The Edwards Co. manufactures air-plane
and ordnance parts.
NORTH CAROLINA SHIPBUILDING CO.
This company which won the Maritime Com-mission's
"M" pennant in 1942, for its record pro-duction
of Liberty Ships at Wilmington is now the
proud possessor of ten gold stars and the Commis-sion's
"Eagle" award.
Harold Mercer, R. A. Firestone and Ben Davis (left to right)
display the pennant presented to Firestone Cotton Mills. Illus-tration
reproduced through courtesy of Textile Bulletin.
Award of the Army-Navy "E" is made to the Firestone Cotton
Mills of Gastonia. The entire group of workers assembled in
front of the plant for the occasion.
Page 56 THE U. C. C. QUARTERLY Spring, 1944
Neither Too Young Nor Too Old
(i)
(2)
With our nation engaged in its greatest war pro-duction
effort, employment demands have been call-ing
forth all our country's labor resources. In many
ways and in many places both the young and the old
are putting their shoulders to the wheels of industry.
The extent to which young people have entered
employment in North Carolina is indicated by the
more than 100,000 child labor permits which the
State Department of Labor reports having issued
since the beginning of the war—chiefly to 16 and 17
year olds.
Under the Governor's Emergency War Powers
Proclamation, relaxations in the hours of work for
minors and for women are permitted under certain
specific conditions. Among the young girls working
on special employment permits in order to meet war
conditions, are telephone operators such as those
shown at the switchboard of the Charlotte exchange.
(1)
TELEPHONE GIRLS are rendering a conspicuous
war service. See story on opposite page. Photo by
Southern Bell Telephone Company.
(2)
MATURE SKILLS gained from long experience are
needed back of the production drive. Illustration
shows a die maker in a converted Kentucky watch
case factory who brings rare ability to the plant's
war-time job of making compass cases, fuze baffles,
machine gun parts and other essential articles.
Official OWI Photo by Palmer.
(3)
A GRANDMOTHER with two sons in the Army,
does her daily shift in the family's garage shop.
Mrs. Earl La Roe of Eustis, Florida, is shown cut-ting
worm gears required for Army aircraft equip-ment,
as part of the war production from an indus-trial
pool. Official OWI Photo by Hollem.
(3)
SPECIAL STUDIES MADE IN 1943 BY BUREAU
OF RESEARCH AND STATISTICS
Changes in Coverage, Employment and Wages, By
Size of Firm—Jan. 1940-Dec. 1942.
Effect of Demobilization and Readjustment on North
Carolina Employment and Unemployment Com-pensation.
Employment Due to War Production.
Employer Experience Rating in North Carolina.
Geographic Distribution of the Nort

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THE U.C.C. QUARTERLY
VOLUMES NO. 2 SPRING, 1944
Retail Trade—From Sales Clerk to Customer
PUBLISHED BY
UNEMPLOYMENT COMPENSATION COMMISSION OF NORTH CAROLINA
Page 34 THE U. C. C. QUARTERLY Spring, 1 944
The U. C. C. Quarterly PRESENT STATUS OF STATE PLANNING
Volume 2 ; Number 2 Spring, 1944
Issued four times a year at Raleigh, N. C, by the
UNEMPLOYMENT COMPENSATION COMMISSION OF
NORTH CAROLINA
Commissioners: Judge C E. Cowan, Morganton; C. A. Fink,
Spencer; Mrs. F. L. Fuller, Jr., Durham; R. Dave Hall,
Belmont; R. Grady Rankin, Charlotte; Dr. Harry D. Wolf,
Chapel Hill.
State Advisory Council: Capus Waynick, High Point, Chair-man;
Willard Dowell, Raleigh; Marion W. Heiss, Greens-boro;
H. L. Kiser, Charlotte; Dr. Thurman D. Kitchin, Wake
Forest; Robert F. Phillips, Asheville; Mrs. R. J. Reynolds,,
Winston-Salem; Mrs. Emil Rosenthal, Goldsboro; W. Cedric
Stallings, Charlotte.
WILLIAM R. CURTIS Acting Chairman
R. FULLER MARTIN Director
MRS. FRANCES TREADWELL HILL Editor
Regular Contributions in each issue from the
united States employment service for
north carolina
Agency of the War Manpower Commission
Cover illustrations represent typical North Carolina industries
under the unemployment compensation program.
Cover for Spring lf>H—Retail Trade—From Sales Clerk to
Customer. Photograph by Germino, Herald-Sun Papers,
Durham, N. C, taken through the courtesy of Ellis Stone &
Co. The largest group of employers contributing to the
Unemployment Compensation Fund in this state are the
retail merchants. In 1943, the Commission handled 2,532
active employer accounts in the industry group classified as
retail trade. So insured against loss of their jobs were
some 50,154 workers.
Although the usual industry feature article is omitted
from this issue of the U. C. C. Quarterly, the study on
"Extension of Unemployment Compensation Coverage to
Employers of One or More Workers" chiefly concerns a much
larger group of retail merchants who at present are not
subject to the U. C. Law in North Carolina.
Sent free and upon request to responsible individuals, agencies,
organizations and libraries. Address: U. C. C. Informational
Service, Raleigh, N. C.
CONTENTS
Present Status of State Planning, By Capus
Waynick 34
Extension of Unemployment Compensation To
Employers of One or More Workers 35
Review of Business Trends, By S. F. Campbell 39
An Explanation of the Word "Voluntarily" as
Used in Connection With a Disqualification
for Leaving Work, By C. U. Harris and
Ralph Moody 43
Notes on U. C. C. Operations 45
U. C. Fund Has Benefited 300,000
Veterans Urged to Apply for Jobless Insurance
Payroll Tax Reductions
Wage Record Accounting
U. C. C. Benefits Denied to 619 Cooleemee Workers
Special Research Studies
Voluntary Contributions to Employer Reserve Accounts
Analysis of Employers Covered By U. C. Law
The Unemployed 50
Disability Insurance, By B. S. Sanders 51
North Carolina Plants Continue to Win Awards 53
Neither Too Young Nor Too Old 56
The Switchboard as a Battlefront . 57
Civilian Awards 58
By Capus Waynick, Chairman, U.C.C. Advisory
Council; Member, State Planning Board.
The two public agencies that have the most poig-nant
interest in what the State Planning Board may
do are the U.C.C. and the U.S.E.S. Both concern
themselves with the insistent, human problem of a
livelihood for the average citizen. Liberty without
a meal ticket is an empty principle. Man does not
live by bread alone but he doesn't live at all on the
earthly plane long without bread or its equivalent.
For most of us, therefore, a job is the thing—
a
chance to work under reasonably pleasant condi-tions,
steadily earning a living.
One of the first considerations of all planning
must be the development of that kind of job for
everybody who wants it. State planning must keep
job-development and job-maintenance constantly in
view as a primary objective. These two state agen-cies,
therefore, not only will watch the progress of
the State Planning Board with keen interest, but
they will assist it with accumulated data about em-ployment
conditions in the state before the war and
at the present time. These data are essential raw
material for both the prophet and the designer of
post-war conditions.
The State Planning Board, authorized by the 1943
General Assembly, is just now getting well under-way
with its work. It made an abortive start under
a chairman who had to surrender the responsibility.
That caused the postponement of the selection of
paid personnel, and not until April 1 did the man-aging
director assume his post. That official is Felix
Grisette, of Chapel Hill, drafted from the C.E.D.,
an unofficial agency which is trying to prepare pri-vate
enterprise for the shocks of peace. Fortu-nately,
the planning board executive's immediate
past work was good training for his new service.
Mr. Grisette is set up now in the Alumni Building
at Chapel Hill with clerical help but without his
assistant director. In the short time he has been
on the job he has developed a clear statement of
functions and policies for the board that are con-sistent
with the legislative directive and the board
has adopted the proposals.
The April meeting of the board authorized the
staff to concentrate in the ensuing few months on
three undertakings: 1. Make a study of the build-ing
needs of state institutions, with the advice and
help of trustees and directors. 2. Make an analysis
of the North Carolina tax structure for use in pro-motion
of new industries. 3. Cooperate with local
planning boards and commissions.
The board has expressed the belief that there are
five broad fields of activity in which it properly may
function : 1. Public works planning. 2. Industrial
planning. 3. Agricultural planning. 4. Tourist and
travel planning. 5. General improvement planning.
That final item suggests a statue to the unknown
god, but the board is somewhat more specific about
it. "General improvement" is defined as beneficial
Spring, 1 944 THE U. C. C. QUARTERLY Page 35
effects on problems of education, public health, pub-lic
welfare, recreation and culture.
Obviously the accepted province of the Planning
Board is wide, but it has declared an immediate pur-pose
not to scatter its shots. What work is done
therefore, in the ensuing months before the next
legislature meets, is likely to be confined to a nar-rowly
limited portion of that comprehensive pro-vince.
What can State Planning do to make jobs against
that unknown future day of military and war-in-dustry
demobilization? It can do something, of
course, by having ready well-considered proposals,
if not actual plans and specifications, for public
buildings and other public structures. That kind
of service is important, but the expenditure of public
funds to create work opportunities is at best a self-limiting
device for the post-war years. Planning
must go further. We must find some way to use
our expanded production equipment to produce the
kind of merchandise that will enrich living while
furnishing jobs for those who need them.
The State Planning Board has an analysis of the
industrial state furnished through the work of Dr.
Howard Odum's staff which may become the first
publication of the new board. It is rich in sugges-tion
and it might prove to be of tremendous im-portance
through stimulation of industrial effort in
the state. An idea based on understanding of
present conditions is a tremendous creative force.
That report is full of such ideas.
RECOMMENDED READING
{Look to Shelter For a Rainy Day)
Unemployment compensation benefits paid in
North Carolina during past months have been the
lowest in amount since the system was started. It
doesn't take a genius to figure the reason. Anybody
who wants a job has it.
And now while everybody has one or can step a
few feet and get one, there is a little fable they
should read again. It is the story of the grasshopper
and the ant.
The wartime boom will not last forever; the sun
of an artificial prosperity will have to set some day.
Only a fool would disregard the warnings of the
Great Depression.
From an Editorial in the Charlotte Observer, 1943.
Extension of Unemployment Compensation Coverage to
Employers of One or More Workers*
A SUMMARY OF EXPERIENCE IN THIRTEEN STATES WHERE PRESENT COVERAGE IS THAT OF ONE OR MORE
WORKERS
The reported experience of thirteen states where
unemployment insurance covers employers of one or
more workers adds up to a total of evidence over-whelmingly
in favor of such full coverage. Limited
coverage, as that of employers of eight or more
workers, is revealed as an administrative, a social
and an economic handicap.
The thirteen states concerned are Arkansas, Dela-ware,
the District of Columbia, Hawaii, Idaho,
Massachusetts, Minnesota, Montana, Nevada, Penn-sylvania,
Utah, Washington, and Wyoming. These
include states both large and small, whether on the
basis of population or geography, and states that are
predominantly agricultural as well as two large in-dustrial
commonwealths. Yet, regardless of such
differences, their answers to questions with respect
to full unemployment compensation coverage bear
close parallels.
The questions on which these thirteen states were
asked to give such information as they could are as
follows
:
1. What administrative difficulties have you en-countered
in administering your coverage pro-vision
as it applies to employers of fewer than
eight workers ?
2. How many of your employers employ (a)
fewer than eight workers ; and (b) more than
eight workers?
*A report prepared for the State Advisory Council, U. C. C. of
N. C.
3. How many workers are employed by employers
of (a) fewer than eight; and (b) more than
eight ?
4. Do the contributions from employers of fewer
than eight meet the benefit liability of the
workers of such employers?
'5. What have been the economic effects of extend-ing
coverage to employers of fewer than eight ?
More specifically, is there any evidence that
the extension of coverage to include such em-ployers
forced any of them out of business ?
The concensus of opinion recorded in the replies
indicates
:
(1) Administrative difficulties are overshadowed
by administrative advantages.
(2) For the thirteen states, 77 percent of all em-ployers
employ fewer than eight workers, and 23
percent employ more than eight.
(3) For the thirteen states, 13 percent of all
covered workers are employed by units with fewer
than eight; and 87 percent by units with more than
eight.
(4) On the whole, contributions from employers
of fewer than eight more than meet the benefit
liability of their workers, with a good margin of
contributions over benefits. Individually, there is
considerable difference in this respect as between em-ployers
in different industry groups.
(5) All states are in agreement in reporting no
Page 36 THE U. C. C. QUARTERLY Spring, 1944
unwholesome economic effect on small firms which
can be charged to unemployment insurance coverage.
On the contrary, several states emphatically point to
beneficial economic results.
Some of the more important facts developed by the
inquiry deserve mention. Specifically with regard to
the questions put, the answers received may be sum-marized
as follows
:
ADMINISTRATIVE DIFFICULTIES
Most of the states in which a comparison is pos-sible
recognize some difficulties in administration,
but in practically all cases these are such as might be
expected to arise during the early period of any new
program, and which may be expected to disappear as
employers become familiar with the routine of mak-ing
reports.
Such difficulties as inadequate record keeping by
small employers, delinquent reports, a higher mor-tality
rate among small establishments, and addi-tional
auditing and paper work are mentioned by
some of the states; and yet are denied by others as
being any more of a problem to extended than to
limited coverage.
It appears obvious from the reports that for at
least a time the extension of coverage results in an
increase in the total cost of administration, but at
the same time results in an actual reduction in the
unit cost per employer. The increase in total cost
may be offset eventually, by the reduction in the
expense of liability determinations.
The potential increase in administrative cost is not
raised by the inquiry; however, one state furnishes
data indicating that while coverage is increased 22
percent, the unit cost per 100 employers is reduced
by 46 percent.
See Appendix A for excerpts from reports.
INCREASE IN NUMBER OF COVERED
EMPLOYERS AND OF COVERED WORKERS
The thirteen states involved in the inquiry repre-sent
some 367,700 employers and 6,827,280 covered
UNEMPLOYMENT COMPENSATION COVERAGE OF EMPLOYERS
OF ONE OR MORE WORKERS
Number of Employers
With
Workers Employed by Employers
With
STATE
Fewer
Than 8
Workers
%of
Total
8 or more
Workers
%of
Total
Fewer
Than 8
Workers
%of
Total
8 or more
Workers
%of
Total
Arkansas
Delaware
D. C
14,277
3,151
12,000
4,000
. 7,780
54,000
16,538
7,500
1,692
124,000
5,191
30,000
3,200
79
70
71
77
84
75
67
75
63
80
72
79
80
3,743
1,368
5,000
1 . 195
1,506
18,000
8,269
2,500
989
31,000
2,000
8,000
800
21
30
29
23
16
25
33
25
37
20
28
21
20
32,467
9,470
50,000
9,000
13,679
270,000
97,500
24,000
4,395
280,000
12,441
90,000
10,000
13
8
17
10
12
16
15
20
11
10
11
20
20
220,183
108,373
250,000
81,000
96,475
1,450,000
552,500
96,000
33,862
2,520,000
105,935
370,000
40,000
87
92
83
90
88
84
85
80
89
90
89
80
80
Hawaii
Idaho
Massachusetts...
Minnesota. ...
Montana
Nevada
Pennsylvania
Utah ___
Washington
Wvoming..
Total 283,330 77 84,370 23 902,952 13 5,924,328 87
workers. Although there are many statistical differ-ences
in the figures as between states, such differ-ences
are immaterial for the purpose of the present
inquiry and do not affect the conclusions to be drawn
from it.
The full coverage in the thirteen states places
283,330 covered units in the group of small em-ployers,
and 84,370 in the group employing eight or
more workers. Similarly, the number of covered
workers employed by the smaller firms is given as
902,952, and the number working for employers of
eight or more as 5,924,328.
On this basis, any state which plans to extend its
coverage from the minimum provision of employers
of eight or more workers to include the smaller em-ployers
of fewer than eight workers, may expect its
program to embrace over three times as many em-ployers
as before, and 15 percent more workers.
ADEQUACY OF CONTRIBUTIONS
TO MEET BENEFIT LIABILITY
Four states express the emphatic opinion that con-tributions
from small firms are more than adequate
for benefit payments insofar as experience to date is
concerned. One state estimates that contributions
are adequate in 80 percent of the cases. But for
most of the states, the recent period included in ex-tended
coverage is regarded as an insufficient basis
for determining the adequacy of employer reserves
for units with fewer than eight workers. It is
generally recognized that the solvency of an em-ployer's
reserve account is related less to the number
of workers employed than to the nature of his busi-ness
and other factors.
It appears that a much higher proportion of the
accounts of small employers are likely to become
eligible for lower tax rates under employer ex-perience
rating plans.
One state reports a higher, and one a lower pro-portion
of small as against large employers with
overdrawn accounts. In either case, the amounts
overdrawn by the larger employers are many times
greater than the insufficiencies of the small accounts.
See Appendix B for excerpts from reports.
ECONOMIC EFFECTS OF FULL COVERAGE
No state gives any evidence to show that extended
unemployment compensation coverage, while levying
a tax on small employers, operates in any case to
force such an employer out of business. All states
express the view that the extension of coverage has
no unwholesome effect on small business. Rather,
the reverse result seems to follow. Statements in
the reports emphasize that extended coverage has
been especially beneficial to the small employer:
(a) It removes any charge of discrimination among
employers and improves business relations; (b) If
enables employers to obtain a better class of workers
;
(c) As unemployment compensation operates to
maintain consumer purchasing power, it has a
greater practical value to the smaller employers.
See Appendix C for excerpts from reports.
Spring, 1 944 THE U. C. C. QUARTERLY Page 37
Appendix A
—
Administrative Difficulties
"Getting employers having fewer than eight employees to
keep accurate records and make reports promptly."
"The experience of this Board in administering coverage
to employers of one or more workers is as follows:
A. It is necessary to maintain a large field staff to in-struct
employers in filing reports, secure verified informa-tion
and follow up ignored debit memos before prosecuting
on violations.
B. Inaccurate remittances submitted result in a large
number of debit and credit memoranda.
C. The increased delinquencies require a larger legal
staff to enforce collections.
D. The number of employers going into business and
retiring from business, coming active or inactive, changes of
ownership are more numerous. To maintain control of this
situation a regulation is necessary to require 'no employee
reports'."
"We have encountered no particular administrative diffi-culties
except that the mortality rate of small businesses is
much higher than that for the larger organizations. This to
some extent increases administrative costs. The bookkeep-ing
of small businesses generally is not very good; there-fore,
we have experienced some difficulty in obtaining
accurate reports. Also, the delinquency rate for small em-ployers
is considerably higher than that of larger em-ployers."
"It is our opinion that a straight one or more coverage
creates fewer administrative problems. We have had very
little difficulty. It is true that there is a tendency for the
small employer to be delinquent, and in numbers of de-linquent
accounts, the small employer, should your law be
changed, will irritate your collection people. On the other
hand, amounts involved are hardly worth considering. As
time goes on you will find the small employers reporting
more promptly. At least that is our experience. The small
employers are honest, and after you have given up on an
account, payment will be made. We have had payments of
delinquent employer accounts made by employers who have
lost their business in a commercial failure and have gone
out to work for another employer, lost their jobs, have
become eligible for unemployment compensation benefits,
and have paid their old delinquent employer tax out of their
benefit checks. We feel that we have less trouble with the
small employers, than we would have in trying to explain to
workers ineligible because their employers did not employ
sufficient other men to become subject, than we have
through the minor collections. Administrative difficulties
of a one or more law are largely due to careless bookkeeping
methods on the part of the small employer. It is a little
more difficult to obtain wage reports and to make collec-tions.
The small employer, going broke, is prone to leave
the state and it is hard to get in touch with him to obtain
wage information. Correspondence is increased tremen-dously."
"The administrative task, in some of its aspects, has been
intensified with respect to small employers. Both reporting
delinquency and turnover in employer accounts are rela-tively
greater among small employers than among those
with larger payrolls."
"We haven't experienced administrative difficulties in
connection with administering the Employment Security Act
as it applies to employers with fewer than eight workers.
However, we have had to increase our staff in efforts to
obtain complete coverage of all employing units which
should be subject to the act. The turnover in employing
units is considerably greater among small employers. It is
believed that it costs as much or more to carry the account
of a small employer, than a large employer; but of course
the larger the employer, the greater the work would be in
processing wage reports."
"We have not found any very substantial administrative
difficulties in applying the Law to the employers of fewer
than eight workers. The most substantial difficulty is in
connection with the securing of reports. The occurrence of
report delinquency in the case of the smaller employer is
more frequent than with the larger employer. Our normal
expectation of report delinquency at the end of the reporting
period for employers of eight or more was 5%. Our present
experience with all employers including the "one or more"
is 9%. Apparently about the same proportion of employers
respond to first notices of report delinquency. Roughly,
50% of the reports come in in response to the delinquency
notices. Our experience with the employers of eight or
more was identical.
"Of course the number of births and deaths is consider-ably
higher among the smaller employers and hence our
account change load has very materially increased. Never-theless,
we have not found this a substantial problem. The
whole answer in connection with obtaining reports and the
money due thereon, as we see it, lies in a speedy follow-up
on report and money delinquency.
"We were particularly fortunate in having established a
rather complete file with respect to non-liable employers
well before we undertook the new coverage. Several weeks
before the date the new coverage commenced, this file was
thoroughly combed and checked against records of our State
Workmens Compensation Department and the Bureau of
Internal Revenue Federal Insurance Contributions Tax
Records. We were thereby enabled to establish about 90%
of our new accounts from information received by mail. The
balance had to be obtained by field contact. All this was
done between July 1, the new coverage date, and September
30. Thereafter in October and November, we put on a concen
trated house to house campaign, having first supplied our
field men with a list of the newly activated accounts in
their areas. Calls were not made on any firm for which we
had an account established. At the same time considerable
publicity was released through the newspapers, radio and
any other suitable available channels. A great deal of
future difficulty can be avoided if a thorough-going job of
establishing the new accounts is done in the beginning. We
were able to complete our full action on the new accounts
within five months from the date the coverage started.
Particular attention should be paid to planning in this
respect.
"We in this state are quite pleased with the way the
coverage of "one or more" was accepted by the employers.
The proposal went through our legislature with practically
no opposition and no serious objections were subsequently
voiced. A complete "one or more" coverage presents some
advantages over the payroll test, or weeks test of employ-ment
in that we are no longer faced with the necessity for
making liability audits or quibbling with the employer over
exact payroll counts or amounts in a given week. When
our Field Advisor walks into the employer's place of busi-ness,
the only question to be determined is whether or not
the employment is subject employment. Although the time
saved in liability audits probably does not equal the in-creased
effort in securing reports from the small employers,
we are completely in favor of complete coverage rather than
the use of some qualifying test to eliminate the short time
employment. At the time we adopted the extended cover-age,
we also adopted an exclusion for "casual labor" which
is quite similar to that used by the Federal Social Security
Acts. This serves to eliminate a great deal of the inter-mittent
employment which otherwise would be covered. Our
coverage is practically identical with that of the Federal
Insurance Contributions Act and we find this advantageous.
Aside from the matter of convenience to the employer, we
find ourselves better able to police our accounts by direct
clearance with the Collector of Internal Revenue on all
account changes.
"We also adopted into our statute at the same time, a
provision for summary collection of contributions including
in the procedure a provision for an administrative hearing
of disputed assessments similar to that provided for benefit
denials. Had it not been for this summary procedure and
the allied hearings procedure, we would not have been able
to handle the "one or more" coverage so easily. There are
so many cessations in small business that a rapid collection
remedy must be afforded. Civil suit will not do because it
is too slow. The provision for administrative hearings is
desirable because it permits the small employer to present
his case at little cost. Defense against a civil suit is not a
desirable remedy for the small employer who can ill afford
the action. Provision is, of course, made for appeal to the
courts."
"The smaller employer cannot afford to maintain the pay-roll
records in a manner comparable Avith the larger firms
and, for this reason, some difficulty has been experienced in
field audits. It is our observation that the changes in
ownership entity are more frequent among smaller busi-nesses."
"We find that the majority of employers of fewer than
eight workers fail to keep good records and are usually slow
in submitting reports."
Page 38 THE U. C. C. QUARTERLY Spring, 1 944
"The problem of seeking out small employers was simpli-fied
greatly through the cooperation of the Regional Repre-sentative
of the Social Security Board, who obtained from
the Bureau of Old Age and Survivors Insurance, the com-plete
list of their covered employers in the state. This
material was invaluable to us in carrying out the program.
Much time and effort was spent during the time when the
status of employers of one was being examined to educate
them in their responsibilities and in the requirements of
the law. In most cases, a field agent of the Division went
to the small employer's place of business to get the infor-mation
necessary to determine his status and to instruct
him in the things he must do to comply with the law. By
following that procedure many of the difficulties that were
anticipated have failed to materialize.
"The problem involved in determining subjectivity of an
employer are not as difficult when employers of one are
subject as they were when the coverage was extended only
to employers of eight or more. Under the broader coverage,
it is necessary to determine only that the employer had some
one in employment for some day in each of twenty weeks.
There has been some difficulty, however, among the pro-fessional
groups where one individual works for more than
one professional man. This problem has been simplified
somewhat, by getting one of the individuals in the group to
accept responsibility for the taxing and reporting require-ments
and declaring him to be subject to the law.
"It does not seem to be any more difficult to enforce the
contribution and reporting requirements with small em-ployers
than it is with employers of eight or more. The
difference between the two groups in the percentage of
delinquency for reports or money, is very slight. For the
most part, the small employers are paying their contribu-tions
on time and their reports as rendered are reasonably
correct.
"There is a much greater percentage of mortality among
small employers than among large ones. Currently much
of this is due to the war. Employers are drafted and close
their enterprises for the duration. Many others have sold
their businesses or closed up and entered defense work for
the duration. Others just enter business for awhile, fail to
make a go of it and close. This percentage of mortality does
not create a new administrative difficulty, but it increases
the amount of work necessary to be done in the maintenance
of employer status records.
"A rather annoying situation which exists, is the tendency
of small employers to file with us material that has no con-nection
with unemployment compensation. When quarterly
reports are due, we also receive such material as OASI re-ports,
withholding tax reports, Federal and State Income
tax reports, OPA ration forms, etc., with payments if any is
required. Generally such material is re-routed to its proper
destination and the employer is notified to that effect."
Appendix B
—
Adequacy of Contributions to Meet
Benefit Liability
"Considered as a group, the answer to this question is
yes, and if treated individually, the answer is no."
payroll, and their benefit charges are astonishingly high.
Small mercantile and real estate offices often have no bene-fit
charges against their accounts in our limited period of a
little more than four years of benefit payments."
"Currently the contributions of employers of four, five,
six, or seven workers are sufficient to meet the benefit
liability of such employers. As a matter of fact, many of
them are enjoying a reduced rate in 1943 because of their
experience since 1939. This also may be due to war con-ditions
since benefit payments for the years 1941 and 194 2
were far below normal. Since the coverage was not ex-tended
to employers of one until January 1, 19 43, no figures
are as yet available to determine whether the contributions
will meet the benefit liability in this class."
"We believe that it is the type of industry and not the
number of workers employed by employers which de-termines
the relative drain upon the fund for benefits. In
this state, the contract construction industry has year after
year drawn more in benefits than it has paid in contri-butions."
"We do not have exact information on the benefit liability
of the small employer. We know this much—that benefit
costs vary tremendously. Some small employers—in fact,
many small employers—change workers very infrequently,
and have no benefit costs against their accounts, or prac-tically
none. Other small employers are constantly chang-ing,
and benefit costs run many times their tax payments.
This question would be easier to answer by industry than as
a whole: We find that restaurants and drinking places em-ploying
two or three persons have a constantly changing
"It is our opinion that the covering of one or more
workers would not materially increase the benefit liability."
"We can only surmise since we have had no experience
with benefit payments of sufficient importance to justify any
conclusions. Nevertheless, we predict that contributions
from the small employers will be more than ample to meet
the benefit liability. It is pretty well established that the
small employer is not as much influenced by the economic
conditions which cause unemployment as is the larger em-ployer.
The most frequent causes of unemployment are in
connection with casual, seasonal, technical change and
cyclical factors. The only factor substantially affecting the
small employer, is that of fluctuations in the business cycle
and in this matter the reaction is apt to be slower than in
the case of the larger business."
"In a period of highest benefit payments, our study indi-cates
that the contributions paid by the smaller employers,
exceeds the benefits paid their former employees by more
than 20%.
Of the employers whose accounts were involved in the
employer experience rating study, about 35% of the smaller
employers were overdrawn as compared to about 20% of
the larger employers, but the overdraft of the smaller em-ployers
amounted to only about $150,000, as compared to
about $422,000 for the larger ones for the 36-month period."
"We have a 'pooled fund'. Although we have no detailed
report, from our experience, we believe there are not more
than twelve employers whose contributions were over-drawn
owing to benefits paid."
FROM A TABULATION OF EMPLOYERS' EXPERIENCE,
JANUARY 1, 1940 TO DECEMBER 31, 1942, BASED
ON NUMBER OF WORKERS PER EMPLOYER.
Employing
Unit of
1-8
workers
8 or more
workers
Accounts with Number of these
Excess with lower tax Accounts witli
Contributions rate of 1.9% Excess Benefits
2,684
1,162
1,885
222
661
304
Amount
Over-drawn
$108,435
669,118
Appendix C
—
Economic Effects of Full Coverage
"We feel it is extremely unlikely that smaller employer-coverage
under the Law has forced any such employer out
of business."
"There have been occasions wherein the employer claimed
he would have to cease business operations if forced to pay
the Unemployment Tax; but after investigation, in every
instance, the employer's failure is actually due to other
causes."
"There is no data to indicate that the extension of cover-age
to employers of fewer than eight has had adverse
economic effect. The extension of coverage has in many
instances brought about better public relations, particularly
among contractors and other employers obtaining business
on bids, as excluding the small operator from coverage, has
the tendency of giving him a price advantage which the
larger operator resents. Being under coverage has a bene-ficial
effect as far as the small operator is concerned, in that
he is able to obtain more competent help than would be
possible otherwise."
"We have no evidence that the extension of coverage to
include small employers, has forced any appreciable number
of them out of business."
"We think the economic effects of a coverage of one or
more have been good. Our workers are better satisfied, and
while we have many complaints from the small employer,
we greatly favor complete coverage. We have no informa-tion
other than an occasional note on a contribution report
from small employers indicating that they have been forced
out of business because of the unemployment compensation
tax. Is not this claim, made occasionally and on rare oc-casions,
somewhat ridiculous in view of the top limit Of
2.7% on their tax? I mean by that, any business that
would fail because of such a tax would, it appears, be
certain to fail in any event."
Spring, 1 944 THE U. C. C. QUARTERLY Page 39
"It is our opinion that the covering of employers of fewer
than eight employees has had no economic effects on their
business, and that no employer in this state has been forced
out of business because of this coverage."
"We have no evidence that unemployment compensation
coverage has resulted in any small employer being forced
out of business."
"There is no evidence whatsoever that the extension of
coverage has unduly burdened small business. We know of
no individual cases wherein a small employer has been
forced out of business because of the extended coverage.
On the other hand, we are of the opinion that small business
benefits from operations of unemployment insurance con-siderably
more than the direct cost to him in the way of
contributions, for the reason that in this state most of the
consumers' goods are distributed by small units. The bene-fit
checks used in the purchase of groceries, clothing, amuse-ments,
etc., flow to small establishments, increasing their
volume of business and, consequently, increasing profits."
"Insofar as we are aware, no small employer has been
forced to close because of the imposition of the unemploy-ment
payroll tax "
"There have been no apparent adverse economic effects
in the extension of coverage. As far as we know, no small
employer has charged or intimated that the burden of this
tax has in any way contributed to his liquidation. There
are, of course, openly voiced objections to the imposition of
the tax, but most of them come from the larger employers
and generally from the employers whose employees are less
apt to need the benefit protection of the Act," (this state
does not have an experience rating provision).
"We believe no employer has been forced out of business
because of the cost of coverage. It is doubtful whether
unemployment compensation would be of practical value in
maintaining purchasing power in our state if there were less
coverage."
"As far as we know, there has not been any case of an
employer being forced out of business because of his having
to make payments under the unemployment compensation
law."
Review of Business Trends
By S. F. Campbell, Supervisor, Bureau of Research and Statistics
This is an account of business activity in North
Carolina as reflected by movements in selected in-dicators.
Indices have been constructed on the basis
of the 1935-1939 average, seasonally adjusted, which
is taken as 100. Data from which the indices were
made tvere taken from, reports of the Federal Re-serve
Board, Bureau of the Census, Federal Power
Commission, U. S. Bureau of Mines, Survey of Cur-rent
Business, U. S. Post Office Departmetit, Life
Insurance Sales Research Bureau, State Department
of Labor, State Department of Revenue, and South-ern
Furniture Manufacturers Association.
The indicators selected include the following: cot-ton
consumption, active spindle hours, hours per
spindle in place, electrical energy productiori, cigar-ette
production, gasoline sales, new car sales, N. C.
batik debits, construction contracts, ordinary life
insurance sales, cement shipments, department store
sales, employment and payrolls (all industries) , em-ployment
and payrolls (all manufacturing), furni-ture
shipments, retail furniture sales, iveeks of un-employment
compensated. Complete mimeographed,
tables showing the monthly movements of these indi-cators,
and their relation to trend data, are available
on request.
Previous articles by Mr. Campbell on North Caro-lina
business activity are contained in the U. C. C.
Quarterly, Vol. I, No. 1, pages 26-27, and Vol. I,
No. 3, pages 82-83.—Editor's Note.
REVIEW OF 1943 BUSINESS LEVEL
As will be seen from the seasonal index of North
Carolina business activity, activities as a whole are
not subject to violent fluctuations, although there are
troughs in certain types of industry which are offset
by seasonal peaks in others. This tends to level off
the combined seasonal index. Four months of the
year are generally below normal, the range being
from 89.74 in February to 106.03 in October. How-ever,
the seasonal index is not adjusted for the
actual number of working days in the month and
this exaggerates the depression in the February in-dex.
It is also significant that three of the four
months which are below normal are in consecutive
order. The drop in December is due largely to the
holiday let-up in manufacturing, at which time tex-tile
production is 8.35 percent below normal; elec-trical
energy production 4.55 percent below ; cigarette
production 17.55 percent below; construction 8.35
percent below; furniture shipments from the State
27.30 percent below ; and cement shipments into the
state 39.29 percent below normal. The January in-dex
is depressed by inventory taking and the post
holiday sag in trade, which is then 33.54 percent
below the average for the year. July is the only
other month of the year which is below normal and
reflects the midsummer slack due to vacations, and
seasonal changes in styles, patterns, and stocks for
fall and winter trade.
Two bases for an index of North Carolina trends
are here used: (1) Ratio to long-time trend, in
which the amount of normal annual increment or
decrement has been eliminated, leaving only the
growth or decline due to cyclical influences ; (2)
Average 1935-1939 equals 100, with only seasonal
adjustment. Since the 1935-1939 base is the one
most generally used for month-to-month changes,
and includes whatever trend increment may have
been added to the 1935-1939 level, that index is here
used for review of 1943.
The effect of the war in most industries has been
to eliminate seasonality altogether, with peak pro-duction
continuous. However, in North Carolina a
number of industries necessarily retain their seasonal
movements, due to the non-availability of raw ma-terial.
These are represented in food manufacture,
tobacco processing, fertilizer and its chemical com-ponents,
cotton ginning, and other agricultural
services. The movements of these activities are not
included in the index here used, though their effect is
reflected indirectly through electrical energy produc-tion,
bank debits, and trade. The fluctuation of the
seasonal index ranged from 89.74 to 106.03, a maxi-mum
deviation of 18.15 percent, and while the
Page 40 THE U. C. C. QUARTERLY Spring, 1 944
monthly relatives have been adjusted for seasonal
variation there remained a deviation in the composite
index of from 151.85 in January to 182.14 in June, a
fluctuation of 19.95 percent, caused largely by the
irregular trend in construction which had a maxi-mum
deviation of 391.59 percent.
ELECTRICAL ENERGY PRODUCTION
No industrial activity has made such phenomenal
gains during the last decade as has the production of
electrical current. In 1932 the total production was
1,395,579,000 kw-hours, or a little more than 100
million hours per month. By 1942 production had
increased to an average of 370,857,000 million a
month and in 1943 reached an average of 416,563,000
kw-hours per month, nearly 5 billion kw-hours per
year, or 257.00 percent above 1932 and 12.06 percent
over 1942.
As electrical energy is produced only as needed,
with no "carry over," the index is especially signifi-cant
as a measurement of current industrial activity.
While the increase in production has been greatly
accelerated by war needs, the trend, independent of
the war, and despite the depression year, has been
consistently upward. The average annual increase
from 1920 to 1939 was 9.30 percent, compound in-terest
basis, and in only three years since 1920 was
there a decline from the previous year, in 1928, 1932,
and 1935. The year 1943 began with the index 83.18
percent above the 1935-1939 average, and this was
the lowest index of the year. The peak of produc-tion
for the year was reached in September with the
index at 281.71, and the year ended at 277.49, the
composite for the year being 239.85 compared to
207.99 for 1942.
CIGARETTE PRODUCTION
No data are available on the actual monthly pro-duction
of cigarettes. Production figures as used in
all government publications are taken from tax paid
withdrawals which over a year will represent, with
reasonable accuracy, actual production. The effect
of war demands is also discernible in this series,
though to less extent than in electrical energy and
textiles. Growth has been continuous since 1925
except for 1930-1931-1932, each of which years
showed a decline from the previous year. The aver-age
annual increase, 1935 to 1939, was 7.10 percent,
compound interest basis, while the gain from 1942
to 1943 was 9.29 percent. There was a considerable
sag in the index during May, June, and July, which
dropped to 126.57 in June from 158.60 in January,
but ended the year at 211.29 in December, with a
combined index for the year 1943 of 164.41, or 64.41
percent above the 1935-1939 average, compared to
150.22 for 1942.
GASOLINE SALES
The inclusion of gasoline sales for the purpose of a
business index is open to question because of present
restriction in sales, and while these restrictions do
depress the composite index the monthly relatives
were retained in order to indicate the progressive
effect of the rationing system. Despite these re-strictions,
gasoline consumption in four of the twelve
months of 1943 was above the average of 1935-1939
;
March 30.47 percent above ; April 10.93 percent
above; July 9.54 percent above and October 12.95
percent above. The year ended with the index at
93.75 for December and the index for the year was
99.21 compared to 109.69 for 1942. Average monthly
consumption was 29,568,000 gallons, or 11.47 percent
less than in 1942.
NORTH CAROLINA BANK DEBITS
Charges to individual bank accounts represent
probably the most significant barometer of business
trends of any series available, and it is of special
interest to compare the movements of the North
Carolina index with those of the nation, as this is the
only index which may be said to represent with equal
validity general trends at both the national and state
level.
It is also of special interest to compare the two
indices in relation to the long-time trend and on a
basis of the 1935-1939 average. With respect to the
long-time trend the North Carolina index has been
continuously higher than the national index since
1932. The margin began to grow less at the begin-ning
of 1942 due to the proportionately smaller par-ticipation
of North Carolina in the manufacture of
durable goods. In January 1943 for the first time in
more than ten years the national index rose above
the state level by 1.18 percent. The national increase
over North Carolina has continued progressively
each month until the year ended with the national
index at 232.65 or 16.06 percent above the North
Carolina index of 200.45. This, however, is on a
basis of the long-time trend, 1923-1940, with normal
annual increment eliminated, and the same does not
hold true with respect to the 1935-1939 average,
which includes the trend increment. On that basis
the state index is still above the national level. For
1943 the state index was 207.72, or 14.26 percent
above the national index of 177.42.
Without some knowledge of the relative position of
North Carolina and the nation with respect to bank-ing
activity during the 5-year base period 1935-1939,
the deviations above referred to are not so signifi-cant.
To obtain such knowledge trends were calcu-lated
by the least squares method from monthly data
for the period 1923 to 1940. Log trends were also
constructed and checked by Glover's Exponential
Growth Curve Formula. These showed an average
annual decline in bank debits at a rate of 0.25 percent
for the state and of 0.17 percent for the nation. The
average index for the 5-year period 1935-1939, based
on these trends, was 104.31 for the state and 98.22
for the nation.
State bank debits were declining at a more rapid
rate than the average for the nation by 0.08 per-centage
points over the 18-year period, 1923-1940.
The situation began to change after the 1929 collapse
though the state index did not reach 100 until 1936.
However, a trend computation for the period 1932 to
1939 indicated an annual increase for the state at a
rate of 5.00 percent, compound interest basis. It
appears, therefore, that not only was the relative
position of North Carolina better than that of the
nation during the base period 1935-1939 but that the
subsequent increase in the state, based on that aver-age,
has been at a more accelerated rate. In volume,
Spring, 1 944 THE U. C. C. QUARTERLY Page 41
NORTH CAROLINA BUSINESS INDEX
COMPOSITE AND SELECTED MONTHLY TRENDS, 1942-1944 TO DATE
INOEX
1943 North Carolina debits were 4.55 percent above
1942, compared to an increase in national bank debits
of 27.00 percent over the previous year.
CONSTRUCTION
No activity has been so violently affected by war
demands as construction. Contracts, which aver-aged
$4,544,000 monthly during 1935-1939, rose to an
average of $16,694,000 monthly in 1941, dropped to
$14,225,000 in 1942 and to $7,620,000 in 1943, a de-cline
of 46.43 percent from 1942 and of 54.36 percent
from 1941. These violent fluctuations are reflected
in the monthly relatives which ranged from 374.64 in
June down to 88.72 in May, and the index for the
year 1943 is 170.63, or 70.63 percent above the 1935-
1939 average, compared to an index of 321.93 for the
year 1942. This precipitous drop in construction
activity had an extremely depressing effect on the
composite index for 1943, or rather an exaggerated
effect on the index of 1942 ; for, if construction data
be omitted from both years the index for 1942 would
be 157.85 instead of 172.61, and the index for 1943
would be 171.76 instead of 171.66. It is seen that
while the omission of the data effects little change in
the 1943 index it pulls the 1942 index down by 14.76
percentage points.
CEMENT SHIPMENTS
Since cement shipped into the state is finally re-flected
in construction work, buildings, bridges, or
highways, it is given a weight of only 2.47 in the
computation of the composite index. In volume the
increase from 1942 was the greatest of any series
except sales of ordinary life insurance, 24.15 percent.
Monthly relatives, as in the case of construction, are
hardly significant, as large shipments may result in
a "carry over" rather than in current consumption.
Monthly relatives ranged from 349.19 in January
down to 131.44 in December, the combined index for
the year being 213.60, compared to 177.76 for 1942.
SALES OF ORDINARY LIFE INSURANCE
The sale of ordinary life insurance, which showed
a downward trend from 1923 to 1940, developed a
sharp upturn with the declaration of war, although
the 1943 index is only 18.88 percent above the 1935-
1939 level. Some improvement was shown as early
as 1939, but the index for the year was only 99.86.
Sales in 1943 exceeded 1942 by 29.45 percent, the
largest relative increase of any activity included in
the index.
DEPARTMENT STORE SALES
Since this index is based on a sample, and is com-puted
from monthly percentage changes, rather than
from actual volume, the activity is weighted only
2.74 in arriving at the composite index. Sales were
highest during June and July when the monthly
relatives reached 211.98 and 269.49 respectively. The
Page 42 THE U. C. C. QUARTERLY Spring, 1 944
combined index for 1943 is 176.49, or 37.12 percent
above the 1942 index of 128.71.
POSTAL RECEIPTS
Postal receipts in the seven cities whose banks re-port
through the Federal Reserve System increased
in 1943 over 1942 by 14.37 percent, or by $632,309,
and the 1943 index was 64.70 percent above the 1935-
1939 level and 18.65 percent above the 1942 index.
TEXTILES
The manufacture of textile products in North
Carolina accounts for the employment of 246,000
workers, or 72.0 percent of the total labor force of
the state classified in the 1940 census under manu-facture.
During the second quarter of 1943 employ-ment
in North Carolina textile plants accounted for
42.5 percent of all employment under the North
Carolina Unemployment Compensation Law, and 19.2
percent of the total labor force of the state reported
in the 1940 census. Including those who find employ-ment
in the growth and harvest of cotton, estimated
at 350,000, this industry contributes directly to the
earnings of approximately 50.0 percent of the total
labor force of the state, this notwithstanding the
cotton acreage has been reduced from 1,373,701 in
1919 to 710,228 in 1939 and production reduced from
858,406 bales to 458,146, a decline of 46.6 percent.
Acreage had increased in 1943 to 846,000, or near the
1919 level. Labor employed in the production of wool
is not included, although employment in textile
manufacture includes wool and worsted products, as
well as silk and rayon, which together employ 17,000
workers. Hosiery plants employing 52,000 workers
included in textile manufacture also use all three
types of materials. These statistics give special
significance to trends in textile production and em-ployment
because of their barometric value in gaug-ing
the general business level of the state.
Cotton textile activity in 1943 was slightly below
the 1942 level. The consumption of 2,789,998 bales
of cotton represented a decline of 3.84 percent from
1942, and the 1943 index of 168.88, base 1935-1939
average, represents a decline of 0.72 percent from
the 1942 index of 170.11. The national index of tex-tile
production for 1943, base 1935-1939 average, was
155 or 8.2 percent below the North Carolina index.
The outlook for 1944 is that cotton-fabric require-ments
for military use will remain at about the
present level, while woolen and worsted-fabric re-quirements
are expected to run about 60 percent as
much as in 1943. Production for civilian use is not
expected to increase because of restrictions, labor
conditions, and price ceilings.
An unofficial Washington estimate is that 40 to 50
thousand additional textile workers may be needed
for specialized production in 1944, but since the
number employed in North Carolina textiles during
the second quarter of 1943 was 20.5 percent in ex-cess
of the total 1940 inventory of North Carolina
textile labor, and many of these have since been in-ducted
into military service, it is not clear how any
material increase in textile employment in North
Carolina can be achieved.
Employment conditions in textiles appear on the
whole, to be satisfactory in North Carolina. Average
per capita weekly wages of textile workers covered
by the U. C. law have increased from 1940 to 1942 by
39.79 percent, compared to an average increase for
all covered employment of 36.18 percent. Recently
a North Carolina textile manufacturer who employs
more than 20,000 workers petitioned the Wage and
Hour Division of the U. S. Department of Labor for
a seven and one-half cent increase in the hourly
wage rate of all his employees.
GENERAL TREND
As may be seen from the chart, business activity
in 1943, as reflected by the indicators used in this
bulletin, was at a somewhat lower level than in 1942,
for which the decline in construction was responsible
to a considerable extent. The decline in textile pro-duction,
however, as reflected by a decrease in cotton
consumption of 3.84 percent and in spindle hours of
2.11 percent, while only a fraction of the decline in
construction, is more significant because of the
larger number employed and the tremendous invest-ment
in fixed assets. The 1935-1939 base index
dropped from 172.61 for 1942 to 171.66 for 1943, a
decline of 0.55 percent. The index based on 1913-
1939 trend dropped from 156.44 for 1942 to 150.59
for 1943, a decline of 3.80 percent. The former index
is adjusted only for seasonal movements and conse-quently
includes the trend increment. In the latter
index based on ratio to trend both seasonal and trend
increment have been eliminated so that the decline
of 3.80 percent more accurately measures the extent
of cyclical movements which are considered as in-dependent
of a normal trend.
The outlook for 1944 seems to indicate little
change from 1943. It seems probable rather that the
peak may have been reached in all the series repre-sented
except possibly trade which may be expected
to respond to any removal of restrictions or rationing
provisions with even greater increases in volume as
purchasing power accumulates. Many believe that
the business index will remain at a high level until
the termination of the war.
It may be of interest to observe the behavior of
the national business index during past wars. During
World War I the business index reached its peak in
1916 a year before we entered the war, from which
time it continued to decline although the deflationary
period did not set in until 1920. During the four-year
Civil War the business index reached its peak
during the early part of 1864, months before the
beginning of the deflationary movement, while in the
three-year War of 1812 the reverse was true, the
business index being at its highest levels during the
two years following the war and a year after the
deflationary movement began. If the experience of
the last two wars is repeated, it would appear that
the peak of the prosperity area has been passed
;
that we may expect a further decline and a sub-normal
condition following the termination of the
war, the depth of which will depend upon the degree
of inflation which is permitted during war no less
than upon the portent of our post-war foreign policy.
Spring, 1 944 THE U. C. C. QUARTERLY Page 43
An Explanation of The Word "Voluntarily
95
as Used In
Connection With A Disqualification for Leaving Work
By Charles U. Harris and Ralph Moody, Legal Department, UCC
A consideration of the shades of meaning of the
word "voluntarily" and related words such as "will"
or "volition" is far beyond the length and scope of
this statement. These concepts when pursued to
their logical ends would lead us into the province of
Conation in the field of Psychology and from this
point on we would soon find ourselves involved in
the endless struggle between the adherents of de-terminism
and libertarianism and finally we would
be lost in the chaotic void of Metaphysics.
The word "voluntarily" appears in the disqualifi-cation
section of the Unemployment Compensation
Law of North Carolina and is tied in with the phrase
"without good cause attributable to the employer."
Section 5(a) of the Act reads in part as follows:
"An individual shall be disqualified for benefits . . .
if it is determined by the Commission that such
individual is . . . unemployed because he left work
voluntarily without good cause attributable to the
employer. In applying this language to the situa-tion
where a worker has left his work and filed a
claim we must find, in order to disqualify such a
worker, that there must be : ( 1 ) a separation from
work; (2) the separation must be voluntary; (3)
the separation must be without good cause attribut-able
to the employer. It is hardly necessary to con-trast
or compare "good causes" and "bad causes,"
for if we assume the best "cause" in the world for
leaving work that cause must still be "attributable
to" or proximately linked with the employer before
the claimant can be relieved of the disqualification.
In other words the employer must be to blame for
the separation. It also follows that if any of the
conditions or situations enumerated above do not
exist then the disqualification is not applicable.
When is a separation from work "voluntary," and
when is a separation from work "involuntary," that
is without the "will" or "volition" of the worker?
Obviously a claimant forced or compelled to leave
his work by certain, definite, objective forces should
not suffer disqualification. It is necessary, therefore,
to give the word "voluntarily" a practical and equit-able
interpretation that will take into consideration
the interests of both the worker and the employer.
Like most questions of this nature we find that, "the
doctors differ," and the courts and administrative
agencies have expressed divergent views. In general
there are two attitudes toward this question and one
may be designated as a strict view and the other as
a liberal view. We now give an illustration of these
two points of view.
In the case of Department of Labor and Industry
of the Commonivealth of Pennsylvania, Appellant,
vs. Unemployment Compensation Board of Review;
U.C.I.S., Benefit Series, Vol. 2, No. 4, Case No. 1363
(1939), the facts were that the claimant had been
employed for about three years and ten months by
a dairy company to deliver milk on a milk route. He
separated from work because his physician advised
him to give up his position on account of a rheumatic
condition. He was experiencing severe pains in his
feet and legs, which were aggravated or increased
by being on his feet so much in the early morning
and jumping in and out of the wagon in all kinds
of weather, storms, snow, and rain, and by lack of
sleep. The Board of Review had held that the claim
was compensable and that the claimant left his work
"involuntarily," reasoning as follows
:
"To be voluntary, his act of leaving his work must have
been free from compulsion, and free from the influence of
any extraneous, disturbing cause. A voluntary act is the
antithesis of an act done under compulsion, coercion,
constraint, or objective necessity. The presence of any
physical force compelling the claimant to leave his work
would render his act involuntary and outside the provi-sions
of the Act relied upon by the Division. The require-ments
of the claimant's employment combined with his
physical condition compelled him to quit his work. There
is no more compelling motive for human action than the
preservation of physical well-being. The conditions com-pelling
the claimant to leave his work were not solely
subjective. The necessity of the claimant being on his
feet, so much jumping in and out of the delivery wagon,
and the exposure to all kinds of weather were objective
factors incident to his employment making it necessary
for him to terminate his employment."
The above quotation gives a liberal interpretation
of the word we are considering. On appeal, the
Superior Court of Pennsylvania did not agree with
this view of the matter and in giving a strict defini-tion
of the word "voluntarily" reasoned as follows
:
"The word 'voluntarily' may be used in a number of
different senses, but, in our opinion, having regard to the
purpose and intent of the act, considered as a whole, but
with special reference to its declaration of public policy
and its fourth article, which prescribes the qualification
required to secure compensation and enumerates the
causes which will make an employee ineligible for com-pensation,
the most appropriate meaning or definition is
'of one's own motion' (Century Dictionary); 'of one's own
accord' (Oxford Dictionary); 'acting of one's self (Web-ster's
New International Dictionary). When we say, 'He
left work voluntarily,' we commonly mean he left of his
own motion; he was not discharged. It is the opposite
of a discharge, dismissal or lay-off by the employer or
other action by the employer severing relations with his
employees, to provide against which the act was mainly
designed.
"This meaning of the term is easily applied, is of
general significance and obviates the necessity of an in-quiry
or examination into the mental processes of the
employee which led up to or brought about his resignation
or quitting work of his own motion, the result of which
might or might not be deemed voluntary as considered by
different persons, from different points of view, and thus
be variable and subject to no uniform standard. . . . Few
actions are taken in this world without some extraneous,
constraining or compulsive force or influence and to apply
such an uncertain basis to 'voluntarily leaving work,'
would be doing violence to the usual and ordinary mean-ing
of the term in the light of the purpose of the enact-ment."
The two quotations given above probably repre-sent
the major positions in regard to the matter
under discussion; there are, however, many varia-
Page 44 THE U. C. C. QUARTERLY Spring, 1 944
tions and combinations of these two positions as
will be shown by an examination of the cases report-ed
in the Unemployment Compensation Interpreta-tion
Service, Benefit Series.
On January 5th, 1944, the Attorney-General of
North Carolina rendered an opinion on this subject
and set forth the principles to be followed by the
Commission in applying this disqualification statute
;
under the law of our state this opinion is binding on
the agency and must be followed unless and until
it is modified or reversed by the courts. This opinion
is clear, workable and easy of application ; it draws
a clear line of demarcation between those cases in
which compensation should be allowed and those
where it should be denied. In his opinion the Attor-ney-
General emphasizes the fact that "involuntary
unemployment" is given as a reason for unemploy-ment
compensation legislation, as stated in Section 2
of the Act ; it is stated that illness and other causes
beyond control could result in involuntary unem-ployment
and benefits should not be denied after
ineligibilities have been removed. It will be seen
that the Attorney-General has followed the rule that
remedial legislation should be construed as far as
possible to alleviate the conditions that brought it
into existence; it would seem that the opinion justi-fies
the construction that the forces or compulsions
must affect the physical constitution of the worker
in a direct manner and must be of an impelling
character and should result in depriving the worker
of freedom of choice in the matter. All causes or
motives that operate indirectly upon the employee,
however strong, should be excluded from considera-tion.
We will now quote from the opinion as fol-lows:
"It is inconceivable to me that the General Assembly,
in enacting this beneficent social legislation intended that
a person who had left his or her employment on account
of illness, or other causes beyond control, would be con-sidered
as having forfeited the right to the benefits of the
Act when such person, upon removal of such causes, is
able and available for work but remains unemployed be-cause
of inability to find employment with his or her
employer or on other suitable employment. I, therefore,
am of the opinion that we would be justified in inter-preting
the word 'voluntarily' and the phrase of which
it is a part in such a way as to not deny the benefits of
the Act to those for whom it was clearly intended to help,
and this will result in what might generally be said to
be a liberal interpretation rather than a narrow one,
which has apparently been adopted in some jurisdictions."
"In adopting a liberal interpretation, however, I believe
that this interpretation should be confined to proper
limits in order to give effect to the express intention of
the General Assembly. In ascertaining whether or not
an employee left his employment voluntarily, I think we
would be justified in considering the mental processes,
constraining or compulsive forces or objective influences,
or the freedom or lack of freedom from external compul-sion
or necessity which led up to the claimant's leaving
work, but I think that the Commission should in every
case be fully satisfied that, where an employee has left
the employment, the reasons for so doing were of an im-pelling
character which, in the opinion of the Commission,
afforded ample and complete justification for the sever-ance
of his employment. This would exclude all fictitious
or feigned reasons or excuses for failure to continue in
the work and would comprehend only such causes as
operated directly on the employee which made, in the
opinion of the Commission, his continuance in the employ-ment
impossible, or attended with such circumstances as
to make it unreasonably burdensome for him to continue
therein."
"It seems to me that a cause which only indirectly
operated upon the employee should be excluded and that
the circumstances should be such as could reasonably be
considered to have deprived the employee of freedom of
choice in the matter. It is evident that the illness of an
employee of such a character and nature as to disable
him or her from continuing in the employment would be "
such a cause as to make it necessary for the employee to
discontinue his work as long as this condition existed.
On the other hand, I am inclined to the opinion that,
except under very unusual circumstances, an illness in the
family of an employee would not provide such a cause."
It is unfortunate that some of the newspapers of
the state misunderstood this opinion and carried
articles to the effect that the Attorney-General had
ruled that claimants would be paid unemployment
compensation benefits during periods of illness. In
fact the very opposite is true and the Attorney-
General expressly said so, taking great care to speci-fy
in his opinion that benefits could only be paid
"upon removal of such causes (illness), is able and
available for work but remains unemployed because
of inability to find employment with his or her em-ployer
or in other suitable employment." In the
United States, physical ability to work is a funda-mental
requisite of eligibility; unemployment com-pensation
has never pretended to compensate for
loss of earnings because of sickness, loss of health
or accidents.
If you have been interested enough to read this
statement up to this point, then we would like to
suggest the following situations and ask that you
apply the rule and arrive at your own conclusions
:
1. The claimant while about his work is sudden-ly
stricken with an acute illness and carried to the
hospital.
2. The claimant separates from his work after
an examination and advice from his physician that
he is suffering from pulmonary tuberculosis and that
if he continues to work it will eventually cause his
death.
3. The claimant separates from his work because
of injury due to an accident: (1) connected with his
work; (2) not connected with his work.
4. The claimant separates from work because of
a company rule which precludes continued employ-ment
upon marriage.
5. The claimant separates from work because
her car was destroyed by fire and she had no other
means of transportation to her work.
6. The claimant separates from his work for in-duction
into the armed forces: (1) after receipt of
official notification; (2) he received no official notifi-cation
but enlisted.
7. Claimant separates from his work because of
flood, tornado or act of God.
8. Claimant separates from his work because his
wife was dangerously ill and wanted claimant to
stay with her.
Materials shipped from some war construction
project in North Carolina may eventually be trans-ported
on the back of some native porter through
the trackless jungles of New Guinea or the scorch-ing
sands of the Sahara.
Spring, 1 944 THE U. C. C. QUARTERLY Page 45
Notes on UCC Operations
U. C. FUND HAS BENEFITED 300,
<
The unemployment compensation fund of North
Carolina celebrated its seventh anniversary in April
with a total of gross receipts through the 15th of
the month, of $100,000,000. Payments from this
fund, in the form of benefit checks to those entitled
to receive them, amounted to $25,000,000, leaving a
net balance available for the future of $75,000,000.
It is estimated that more than 300,000 North Caro-lina
men and women, temporarily without jobs, have
benefited from the program.
At the present time, with industrial war expan-sions,
labor replacements of workers now in military
service, etc., the active insurance accounts which
the Commission maintains for individual workers is
probably about 1,500,000. In other words, a million
and a half North Carolinians, because of payments
made by their employers to the Commission, have
a stake in the fund. This $75,000,000 represents
their insurance protection against post-war unem-ployment.
While it would be difficult to assign any special
date as the birthday of unemployment compensation
in this state, it has a history going back to 1933, the
first payments into the fund after the Commission
officially began operations in December 1936, were
received in April, seven years ago. Benefit pay-ments
began in January of 1938. From then on,
probably more than 300,000 individuals have shared
in the $25,000,000 paid out in benefit checks.
At one time in the history of the Commission, as
many as 140,000 jobless workers were drawing
benefit checks, but the claim load dwindled steadily
after this country embarked on war production. By
June of 1942, the number of unemployed had fallen
below any previous level, to an average of 7,000.
The number continued to decline, with almost every
month signalling a new low in unemployment,
through November of last year.
In that month, the number of unemployed, as
indicated by an average of less than 500 weekly ben-efit
checks paid through the state, probably touched
bottom. About half of the local employment offices
had been reporting no new claims.
The total amount of benefit payments for 1943
was $654,230.13. This was considerably less than
the $1,497,499.10 which was added to the fund by
the U. S. Treasury for interest earned during the
same period.
From last November through March, the claim
load increased, due primarily to seasonal lay-offs in
certain industries. In April, the average number of
weekly benefit checks was about 1,500. This still
placed the level of unemployment at slightly more
than half of what it had been a year ago, and about
one seventh of that recorded two years ago.
If the 1944 trend in claims and benefit checks fol-lows
the pattern of 1942 and 1943, which is probable
unless there is some change in the current employ-ment
situation, there should be a decline in numbers
through the summer and early fall months.
In the opinion of employment security adminis-trators,
in Washington and throughout the nation,
the adequacy of the unemployment compensation
program faces its first real test in the post-war
period. With its $75,000,000 reserve fund, and with
its major industries capable of re-conversion to
peace-time production within a comparatively short
time, judging by the speed with which these indus-tries
changed over to meet war production demands,
North Carolina is believed to be in a relatively fav-orable
position.
1942 SUMMARY OF OPERATIONS
Initial Continued Benefit
Month Claims Claims Checks Amounts
January . 23,565 82,984 57,979 $435,270.08
February . 9,316 59,334 48,737 357,875.90
March 6,504 55,014 46,031 343,120.93
April 6,923 49,595 39,148 291,771.07
May 5,248 41,892 36,331 265,719.15
June . 6,906 38,178 29,317 214,521.19
July _ 13,749 48,755 30,135 227,961.83
August . 7,462 38,157 31,609 247,576.03
September . 3,682 32,140 23,198 195,409.81
October .. 2,574 24,857 20,425 179,756.32
November 3,562 17,222 12,823 112,249.45
December 4,389 20,200 13,734 112,988.73
Total .. 93,880 508,328 389,467 $2,984,220.49
1943 SUMMARY OF OPERATIONS
Initial Continued Benefit
Month Claims Claims Checks
January 4,968 19,778 15,515
February 2,124 16,252 13,034
March .. 2,449 16.087 12,781
April „ 1,814 13,483 11,347
May 2,035 11,106 8,369
June 1,283 7,736 5,618
July 2,945 6,921 4,335
August 1,004 5,528 3,719
September . 976 4,098 2,627
October .. 621 2,637 2,231
November 1,023 2,793 2,121
December 1,744 4,476 3,151
Total 22,986 110,895 84,848
FOUR MONTHS OF 1944
Initial Continued Benefit
Month. Claims Claims Checks
January . 1.697 6,145 4,429
February 1,573 3,270 4,530
March 3,474 11,752 6,968
April 1,421 8,298 6,434
Amounts
$114,486.78
95,975.07
95,275.64
7S.799.53
59,924.17
42,280.25
36,444.01
32,902.72
25,689.13
24,207.00
21,787.73
26,458.10
$654,230.13
Amounts
$ 34,869.40
35,706.08
50,035.21
45.812.67
VETERANS URGED TO APPLY
FOR JOBLESS INSURANCE
The Unemployment Compensation Law of North
Carolina includes a special provision for workers who
enter and return from military service. Wage
credits established in their unemployment insurance
accounts while they were working during the two
years before entrance into the armed forces may be
brought forward and made available to them as
veterans during at least two years following return
to civilian life ; but only if each veteran files a claim
within six months of his military discharge.
To make the transfer of his previously earned
unemployment insurance credits, a veteran should
Page 46 THE U. C. C. QUARTERLY Spring, 1944
apply soon after his discharge from service to a
claims-taker of the Unemployment Compensation
Commission, or to an interviewer of the United
States Employment Service, at one of the local Em-ployment
Offices throughout the state.
Not all returning veterans will have wage credits
available for unemployment insurance. The only way
a veteran may determine the status of his account is
by filing a claim with the Unemployment Compen-sation
Commission.
According to W. R. Curtis, Acting Commission
Chairman, "Veterans should look to the future,
regardless of whether or not a veteran has occasion
to draw unemployment insurance benefits within the
six months following his discharge, or whether or
not he is able to work at the time of his discharge,
he should file a claim for unemployment insurance
during this six-month period. Only in this way can
a veteran's record of past earnings in insured em-ployment
be credited to his account for the future.
Otherwise he might forfeit his right to draw benefits
based on prior earnings, if later on he becomes un-employed
and eligible to do so."
"A special regulation has been adopted which con-tains
a statement of our policy for handling, the
cases of veterans who may happen to apply after the
allotted period of six months has elapsed. We do
not want any veteran to forfeit inadvertently his
future benefit rights in unemployment insurance by
failing to apply within six months of his military
discharge. Consequently, if the date on which a
veteran files is longer than six months after he left
the armed forces, this Commission, up to January 31,
1945, will still accept his claim, using the date of his
certificate of discharge by the Government as the
date of his application for unemployment compen-sation.
"However, all returning veterans should file claims
within the six-month period in accordance with the
Law's provisions, and we urge them to do so."
PAYROLL TAX REDUCTIONS
North Carolina employers will save close to two
million dollars in unemployment compensation taxes
this year. This sizeable tax reduction is made
possible by the plan of employer experience rating
which is a feature of the North Carolina law on
unemployment insurance, and 3,536 employers will
benefit from it in 1944—more than twice as many as
the 1,564 who did during 1943.
The Commission's estimated decrease in 1944 con-tributions
to the insurance fund, from 1943 receipts,
of $1,894,791.00, may be regarded as a saving to em-ployers
or as a loss in U. C. C. revenue, but either
way it must be good news to employers.
To a great many of those who have qualified, the
reduced rates which became effective the first of this
year will mean a saving of from twenty to about fifty
percent of what they would have been required to
pay under the regular unemployment compensation
tax rate of 2.7% of payrolls. Our state law and the
laws of some other states, as opposed to federal in-tentions,
provides for a lowered scale of tax rates to
those employers whose experience with regard to
unemployment is considered favorable—that is to
employers who over a period of years have built up
reserve account balances that meet certain standards.
The rating plan is an expression of one of the funda-mental
policies behind social insurance legislation in
offering an incentive to private industry to try to re-move
the cause of insecurity. It aims to put a
premium on the stabilization of employment prac-tices.
The Unemployment Compensation Commission
maintains over 10,000 individual employer accounts.
For purposes of employer experience rating, separate
branch office accounts are considered as one with
their home offices. Some 400 accounts were current-ly
inactive and 1,236 were found to be ineligible for
classification because of insufficient experience.
Computations made for the 7,938 active and eligible
employer accounts resulted in reduced rates becom-ing
applicable to 3,536, or nearly half of them.
The specific lowered rates which now apply to
1944 payrolls are as follows: The rate of 2.5% has
been awarded to 917 employers, and represents a net
saving of 7.5 percent from what their taxes would
be without experience rating. The rate of 2.13%
applies for 915 employers, saving them 21.1 percent
against the standard tax. 803 employers with a rate
of 1.76% will save 34.8 percent in taxes; 619 em-ployers
with a rate of 1.39%- will save 48.5 percent;
174 with a rate of 1.02%, will save 62.2 percent; 55
with a rate of 0.65% will save 75.9 percent; and 53
receiving the maximum allowed reduction with a rate
of 0.27% will save as much as 90 percent of their
taxes.
Over forty percent of North Carolina employers
covered by the Unemployment Compensation Law
have annual payrolls of between $10,000 and $50,000.
More than half of them will share the tax savings
under the 1944 rates, and the greater number of
them with new rates of 2.13%, 1.76%, and 1.39%
will net savings of from twenty to fifty percent of
taxes paid at the standard rate.
WAGE RECORD ACCOUNTING
Wage records of more than a million different
workers are going "through the mill" in the Com-mission's
central Raleigh office. The huge task of
handling these wage items showing earnings for a
quarter or half-year period, and crediting them to
individual worker accounts, is an important part of
the Commission's preparation for handling post-war
applications for benefits.
The payroll records containing these wage items
are received from 10,466 employers, who, generally
having eight or more employees, are covered by the
Unemployment Compensation Law. Since most wage
records are submitted quarterly, the Wage Records
Section of the Commission's Accounting Department
estimates that during 1944 it will handle well over
3,000,000 wage slips. Despite the size and growth
during these war years of the insurance load which
it is carrying, the Commission is operating under a
budget that is constantly being reduced.
Upon arrival of the wage reports in the Raleigh
office, a group of clerks verifies the wages as reported
Spring, 1944 THE U. C. C. QUARTERLY Page 47
for each worker with summary reports also sub-mitted
by employers, arranges the individual wage
reports in sequence according to the workers' social
security account numbers, and inserts individual
wage slips behind index cards in the Wage Record
Files. This is the process by which each individual
worker's account is credited with the amount of
wages earned, so that later the account may serve as
a basis for determining the amount of benefits a
worker is entitled to draw should unemployment
overtake him.
Several steps are necessary before the crediting
process is complete. The verifying clerk lists on an
adding machine for each employer the wages paid to
workers and checks it with the total as reported on
the Employer's Summary Report of Wages Paid. If
the totals are in agreement, the reports are initialed,
assembled, and routed to the sorting clerks. In
instances where the report is found to be out of
balance, a request is sent to the employer to make
the necessary adjustment. Then a sub-processing
group of clerks separates the individual wage reports
and regroups them for sorting by social security ac-count
numbers. This requires three sorting opera-tions.
The first two are done by hand, the third,
which involves a break-down by four digits, is per-formed
by a machine called a "Natsor." The piles
of wage slips, now sorted according to numerical
sequence, are next regrouped—with each series still
kept separate—according to the file of which they
are to become a part. There are three such files:
(1) Social security account numbers assigned in
North Carolina; (2) Social security account numbers
assigned in other states; (3) Alphabetical File for
workers whose reports do not show a social security
account number.
Any discrepancy found on a wage slip as to the
social security account number or the spelling of a
name, necessitates the removal of the slip for special
attention. Because of errors that are detected, the
Accounting Department sends out about 1,000 letters
a year, occasionally followed up by a call from one of
the Commission's
field representa-tives.
The total number
of names and num-bers
in all three files
of wage credit ac-counts
kept by the
Commission exceeds
two million, al-though
not all of
them are active at
the presen time.
Many workers are
no longer engaged
in insured occupa-tions,
many have
left the state, and
many are serving in
our armed forces.
Nevertheless all re-cords
are faithfully
kept from the time operations began in 1937, for it is
not known how many men and wmone in military
service will need to draw unemployment benefits
against wage credits established before they dressed
in uniform. The 1943 General Assembly granted
them the right to do this at any time within six
months after their return to civilian life, should they
be unable to find suitable employment.
When a claim is received, a worker's credit slips
are withdrawn from the Wage Record file. The
earnings listed for the appropriate base period are
then posted on a form known as an "initial determi-nation"
which many claimants have come to know,
since each one receives a copy of his own initial
determination. From the base-period earnings
shown, a claims examiner is able to calculate the
weekly benefit amount to be paid.
The money for benefit payments is withdrawn as
needed from the Unemployment Trust Fund. This
fund is built up by contributions from employers
;
there is no deduction from a worker's pay to support
it. At the present time the fund balance amounts to
something over $75,000,000, which is on deposit in
the United States Treasury, drawing interest from
Government securities.
Figures compiled by the Unemployment Compen-sation
Commission on wage items indicate the gen-eral
increase in the labor force in North Carolina as
a result of wartime activity. They involve only
industries in which workers are insured against the
risk of unemployment under the law, but they show
the general employment trend. The number of
workers for whom wage slips were processed by the
Commission in 1940 was 698,300. In 1941, wage
slips were filed in 814,666 accounts. And in 1942,
the first year of full war production, wage slips
credited as many as 1,061,332 workers with earnings.
The total for this year will be higher. At the end of
each quarter, mail sacks loaded with similar wage
reports pour into the Commission's offices.
Keeping up with this huge volume of wage records
is a large part of the Commission's responsibility in
getting ready to
meet whatever
claim load develops
when the war-time
pace of industry
slackens. In main-taining
this insur-ance
system for
workers against the
risk of losing their
jobs, the Commis-sion
is strengthen-ing
one of the guar-antees
already es-tablished
to the
Freedoms from
Want and from
Fear.
View of the Central Office of the Unemployment Compensation Commission —one row of the files of two million individual wage records used to deter-mine
amount of benefits to which unemployed claimants may be entitled.
Of course not all
the people who may
suffer from unem-ployment
in the
Page 48 THE U. C. C. QUARTERLY Spring, 1 944
post-war period of readjustment are protected by
the program. Workers for small business concerns
and in several classes of occupations are not now
covered by the law. It is, however, a source of real
satisfaction to know that somewheer between one
and two million North Carolinians have rights in a
growing insurance fund of over 75 million dollars
being set aside for them against the rainy days of
unemployment.
ANALYSIS OF EMPLOYERS
COVERED BY U. C. LAW
Under this same title, an article was published in
the March 1944 issue of Employment Security Infor-mation,
the Commission's former monthly publica-tion
to which the U. C. C. Quarterly is successor.
This article was based on an examination of employ-ing
units subject to the state unemployment com-pensation
law in January, 1940, classified by size,
that is, by the number of workers employed.
A similar analysis of covered employers reporting
for the fourth quarter of 1942 has now been made.
It was thought that a comparison of the two studes
would, to some extent, reflect industrial expansions
due to war production. The accompanying table
shows the distribution of workers and wages among
employers at the beginning of last year.
MONTHLY EMPLOYMENT, WAGES AND CONTRIBUTIONS,
BY SIZE OF FIRM, FOURTH QUARTER 1942
Size op Firm bt
Number Employer
Number
of Units
Average
Number
Employed
Percent of
Total
Employed
Average
Monthly
Wages
0- 7 2,989
4,097
1,386
487
277
275
148
118
208
120
35
12
16
7
3
3
12,493
61,116
50,108
30,342
23,284
33,006
25,605
26,923
70,900
79,742
42,911
21,285
38,986
23,942
13,302
51,813
2.06
10.09
8.27
5.01
3.84
5.46
4.23
4.44
11.71
13.17
7.08
3.51
6.43
3.95
2.20
.00
8.55
St 1,812,823
8- 24 6,785 585
25- 49 5.165,007
50- 74 3,192,143
75- 99 2,394,291
100- 149...
.
3,449,051
150- 199... 2,683,891
200- 249... 2,651,772
250- 499... 7,572 212
500- 999. .. 8 732 760
1,000-1,499 5,324,745
1,500-1,999 2,647,509
2,000-2,999 4,703,942
3,000-3,999 2,759,173
4,000-4,999 1,929,778
5,000-5,999
10,000 and over 7,480,130
Total 10,181 605,848 100.00 J 69,284,812
This more recent analysis of 1942 reports is based
on a total number of employing units that is greater
than the total of those studied in 1940. However,
because of statistical differences, and because of the
more or less constant turnover in active employer
accounts, the larger figure may not be taken as an
absolute increase in the number of covered em-ployers
during the intervening period.
Although the round number figures for employers,
workers and wages are not exactly comparable, dif-ferences
between the 1940 and 1942 studies do indi-cate
important increases in each category. What is
most significant is their relative proportions.
_
As between 1940 and 1943, the relative distribu-tion
of workers and wages by size of firm shows
interesting changes. There has definitely occurred
a greater concentration of workers, and a still higher
proportion of total wages paid, among the state's
largest firms—those with more than 500 employees.
It is now the case that two percent of the businesses
are in this category. These large firms employ 45
percent of all workers and pay 49 percent of all
wages.
The greatest relative gains occurred in the group
of employers having 3,000 to 3,999 workers, for
which employment multiplied more than six, and
wages more than eight times.
PERCENTAGE OF TOTAL IN SPECIFIED CLASS
Number op
Workers Employing Units Workers Wages Contributions
1940 1942 1940 1942 1940 1942 1940 1942
Under 50..^ 84.93 83.22
6.60 7.50
7.02 7.35
1.45 1.93
22.60 20.42
9.09 8.85
31.07 25.84
37.24 44.89
24.80 19.85
8.91 8.07
28.46 23.61
37.83 48.47
24.83 18.39
8.92 7.69
28.39 23.57
37.86 50.35
50-99
100-499
500 and over. . .
Total 100.00 100.00 100.00 100.00
The observable growth of larger firms, of course,
means that lesser proportions of business units,
workers and wages, appear for the smaller estab-lishments.
(See table.) But this does not mean
that smaller firms have been shrinking while the
larger ones have been growing, merely that the
growth of large plants has been proportionately
much greater. Actually, smaller businesses too have
been expanding. A recent check of wage reports for
the fourth quarter of 1943, reveals an additional
1,067 employers now having more than 50 workers
on their payrolls, who in 1940 were either not cov-ered
employers or did not carry so many employees.
The greater concentration of employment among
the state's largest industries which is demonstrated
by the 1942 analysis, reflects a significant economic
development for North Carolina. If it is due pri-marily
to war production increases in payrolls,
rather than, in a large part at least, to the more
normal course of industrial expansion which has
been taking place throughout the state for many
years, the question arises as to whether the larger
businesses will hold their gains and continue to in-crease
after the war.
U. C. C. DENIES BENEFITS
TO 619 COOLEEMEE WORKERS
A decision reached by the Unemployment Com-pensation
Commission, and handed down on Feb-ruary
25th, affected some 619 claimants as employees
of the Cooleemee plant of the Erwin Cotton Mills
Company. While this decision follows earlier
precedents, it breaks new ground in this particular
case in denying benefit payments to the claimants
because of their relation to a labor dispute which was
found to be the cause of their unemployment.
The Unemployment Compensation Law carries a
provision that disqualifies a claimant for benefit pay-ments
when it is found that his unemployment is
due to a stoppage of work which exists because of
a labor dispute, unless he can show that he is in no
way directly interested in the dispute and does not
belong to a grade or class of workers some of whom
Spring, 1 944 THE U. C. C. QUARTERLY Page 49
are participating in or have an interest in the
dispute.
. The claims of the 619 Erwin Cotton Mills em-ployees
were filed with the Commission's representa-tives
in May 1943, following a work stoppage which
began on May 6th. Initial determinations by the
Claims Deputy made on the basis of hearings and
recorded evidence were appealed. The issue was
removed to the Chairman of the Commission for a
further hearing and final disposition.
One of the pertinent factors in the case was that
the Textile Workers Union of America, Local No.
251, was recognized as the sole bargaining agency
for all of the employees and claimants concerned, on
the basis of an election under the National Labor
Relations Act and a contract with the employer.
However, the Union in this instance had in no way
sponsored the labor dispute which arose on May 6th
with the refusal of certain of the mill employees to
continue work.
The decision of the Commission denying benefits
to the Erwin claimants is a thoroughly documented
report of some twelve pages. The denial of unem-ployment
insurance payments rests on the applica-tion
to the facts in the case, as brought out by the
evidence, of established definitions of "labor dis-pute,"
"stoppage of work," "participating in,"
"directly interested in," "grade or class," etc. The
Commission found that, as the employer's plant con-stituted
a complete unit of operation, hindrance of
work in one department was responsible for the in-terruption
of work in others. Because all these em-ployees
had only one working agreement with the
company, and one bargaining agent, and homogeneity
of work, they must be considered as all belonging to
the same grade or class of workers. Therefore not
only are the particular employees who precipitated
the labor dispute disqualified from benefits, but like-wise
all other employees in the plant. Though en-gaged
in work in other departments, claimants must
be considered as interested parties by virtue of their
belonging to the same grade or class as the active
disputants, since they are all represented by a single
bargaining agent, and since they are engaged in
chain production.
The Commision's statement at the close of the
decision reads as follows: "It may be that most of
the employees in this mill or plant did not want this
strike, did not participate in any way or manner in
this labor dispute, and, therefore, these employees
feel that they are entitled to benefits. To these em-ployees
it may seem that this decision which deprives
them from benefits is based upon technicalities,
specious reasoning, and distinctions without differ-ences.
These employees must remember, however,
that the Unemployment Compensation Commission
can arrive at no other decision if it is to preserve its
neutrality in disputes of this nature. The Legis-lature
of the State has not delegated to the Unem-ployment
Compensation Commission the right to
pass upon the merits or demerits of labor disputes
and the funds handled by the Commission, paid in
by the taxpayers of the State, cannot be used to
promote strikes or to reward strike-breakers, or to
reward those who do not wish to participate in labor
disputes. These claimants must also remember that
they have voluntarily availed themselves of the law
which gave them unified action under a single agent
known as a bargaining agent. There is no criticism
of these claimants because they availed themselves
of this privilege, but claimants cannot claim the
privilege of unified and concerted action for one pur-pose
and then in the same breath contend that they
are not bound by the acts and conduct of a minority
group which is a part of their organization. The
disadvantages of organized action must be accepted
as well as the advantages."
•
VOLUNTARY CONTRIBUTORS TO
EMPLOYER RESERVE ACCOUNTS
The Unemployment Compensation Law of North
Carolina contains a provision, with regard to em-ployer
experience rating, for voluntary contributions
to the insurance fund. Employers may make volun-tary
contributions to their reserve accounts. It is
conceivable that voluntary contributions might
bring the reserve balance up to such a point as to
entitle the employer to a reduced rate or a further
rate of reduction. Of course, it would be necessary
for the employer to weigh the voluntary contribu-tions
against possible savings from a reduced rate.
Voluntary contributions must be made prior to the
computation date (July 1 of each year) on special
forms prepared by the Commission.
The table below indicates the number of firms
which have taken advantage of this feature of the
North Carolina law.
No. of employers No. of employers
as of June 30, 1942. as of June 30, 1943.
Industry Group Applies to tax rate Applies to tax rate
for 1943 for 1944
Building construction
gen'l contractors - 1 1
Textile Mill Products 4* 3
Furniture & finished
Lumber products _._ 1
Paper and allied products 1
Printing & publishing 2
Chemicals 1
Trucking & Warehousing 1 2
Wholesale trade _ 2 1
Retail trade
—
gen'l merchandise 1
Retail trade—misc. 1
Insurance carriers 1
Total 12 11**
Amounts _ __$392,517.00 $147,381.95
Note: The Unemployment Compensation Law forbids the
publication of information which identifies any in-dividual
employer.
*Three textile mills made voluntary contributions of $50,-
000, $80,000, and $100,000 respectively. As a result, each
received a reduced tax rate for the following calendar year
of 1.0 2 percent of payroll. This is a saving of 6 2.2 per-cent
from tax payments under the standard rate of 2.7
percent.
**A11 of these 11 employers are now paying 1944 payroll
taxes at reduced rates. Five of them, by making such
voluntary contributions in 1943, raised the balance in
their reserve accounts sufficiently to entitle them to the
maximum tax reduction. These five are paying the tax on
19 44 payrolls at the minimum rate of .27 percent, which
represents a saving of 90 percent of their tax if paid at the
standard rate of 2.7 percent. The voluntary contribution
made by one retail merchant reduced his tax all the way
from the maximum to the minimum rate. For one of the
textile manufacturers, the tax saving is estimated to be
more than twice the amount of the voluntary contribution.
Page 50 THE U. C. C. QUARTERLY Spring, 1 944
The Unemployed
The few unemployed who remain as claimants of
unemployment insurance funds represent special
problem cases. One of the most vexing problems
has been that of the in-migrant army wives who
locate in towns and cities near the camps and apply
for work and unemployment compensation through
the local offices, filing claims against wage credits
earned in other states.
Several studies have been made- by the Commission
to determine what type of workers are still without
jobs these days. A 1943 survey of 916 unemployed
claimants indicated that 97 percent of them were in
non-critical occupations, 90 percent were married,
70 percent were white, 63 percent were women, 45
percent had dependents, and 19 percent were from
outside the state. Most of them were semi-skilled
or unskilled workers, and presumably the large pro-portion
of married women with dependents restricted
the possibilities of transferring them to job openings
outside their own communities.
The case of any claimant who refuses an offer of
work is carefully investigated by one of the Com-mission's
claims deputies. Three-quarters of all
initial claims are currently being referred to the
deputies for special examination.
The problem of the army wives who come into
North Carolina to be near their husbands here in
training, and who report themselves as unemployed,
lies in the reluctance of local employers to take on
women who may shortly want to move on again,
should their soldier husbands be transferred else-where.
Among North Carolina workers registering unem-ployment
claims, it is to be expected that a large
number of them will be from the textile manu-facturing
industry which employs a little less than
half of the state's workers covered by the insurance
program. However, an analysis of benefit payments
by industry of last employer, covering the second
quarter of 1943, assigned only a quarter of the
28,917 payments made to textile manufacturing.
Furthermore, only 2,627 of these payments were
made to workers formerly engaged in tobacco pro-cessing
and as few as 246 to those from the furniture
industry.
On the other hand, a large proportion of the pay-ments—
13,268 in number—were made to workers
who had been engaged in wholesale trade, particu-larly
wholesaling in cotton and tobacco products.
The active file of claimants in offices in the eastern,
central, and far western parts of the state for one
week when only 477 jobless workers were drawing
insurance, reveals the kind of unemployment prob-lems
which still exist. Most of the men are elderly,
probably too old to be retrained, and have always
worked at some specialized task such as sawfiling,
bricklaying, timekeeping, or bookkeeping, for which
there happens to be no call in the area where they
live. Most of the women are textile workers from
various operations and shifts on which they are not
currently needed. Age, physical handicaps, trans-lnformat!
on obtained from analysis of the active
File of Claimants for Unemployment Compensation
Number Number
LOCAL Claimants Where Occupation of Reason Given Placement
OFFICE in Active Disability Claimants for Claimant's Problem
File* Mentioned Unemployment
Asheville 32 8 Bookkeeper
Twisting
Illness No work avail-able.
Operator Illness Not able to work.
Cloth Folder Illness Needs light
work.
Flatwork feeder Illness Not employable
Carpenter Con-struction
No work Feeble
Audit Clerk
Hotel Disability Feeble
Thrower II Disability Able to do light
work
Instrument man Illness Breaks out with
poison ivy
when hot
Albemarle 15 3 Steam shovel Illness Held able—age
Seamer Illness Child restricts to
first shift
Labor Illness Referred to job
as watchman
Concord 19 1 Seamer Quit Poor health First shift only
Durham 38 3 Laborer helper Illness Bad ankle
Hotel Mgr. Illness Age and health
Civil Engineer Illness Work dull
Elizabeth City 9 1 Janitor Illness Age—no jani-torial
work
Goldsboro 6 1 Ammunition
weigher Quit—health
Greensboro 41 1 Battery Filler Illness Pending Com-mission
deci-sion
on appeal
Gastonia 5 5 Frame hand Illness Physical Condi-tion
limited
availability
Gateman Discharged Physical condi-tion
Watchman Illness Physical condi-tion
Foreman Con-struction
Illness Physical condi-tion
Textile Supt. Illness Physical Condi-tion
Hickory 5 1 Spinner Textile Sickness No openings
High Point.... 46 7 Ripsaw operator Illness Not able to work
Frame hand Illness Not physically
able
Winder Tex. Illness Very little de-mand
Winder Tex. Illness Very little de-mand
Inspector
Hosiery Illness Very little de-mand
Shaper wood Injury Handicapped
Molder wood Illness Age
Kannapolis 11 7 Spinner Tex. Disability Leg
injury
Loom Fixer Sickness Exhausted bene-fits
Oiler Sickness Able to do light
work
Guide rail cleaner Sickness Dust and Atmos-pheric
Stretcher Tex. Sickness Availability
limited
Oiler Tex. Sickness Age
Elevator
Operator Physical Disa-bility
Availability
limited
Roanoke
Rapids 10 2 Supply clerk
Tex. Sickness Physical Handi-cap
Quiller Tex. Sickness
Total 237 40
As of day survey was made.
Spring, 1 944 THE U. C. C. QUARTERLY Page 5
1
portation difficulties, and the impossibility for some
of night-shift work, all figure as reasons why these
unemployed are not soon rehired. Many of the
applications being received for unemployment bene-fits
are from workers who were discharged because
of illness. As long as they remain too sick to work,
the law disqualifies them from receiving insurance
checks.
Disability Insurance1
By Barkev S. Sanders, Chief, Division of Health and Disability Studies, Social Security Board"
NEED FOR DISABILITY COMPENSATION
In reviewing the need for disability compensation
as an integral part of our protection for workers
against the major economic hazards of life, the risk
of disability may be compared with that of unem-ployment.
The nature of the two risks. Disability, like un-employment,
deprives a worker of his earnings.
When his job stops, the able-bodied worker can often
cut down his expenses but the disabled worker com-monly
faces increased expenditures for necessary
medical services, hospitalization, and other auxiliary
and related services and commodities. He is thus
exposed to double jeopardy—not only loss of income
but also new and burdensome expenditures against
which he seldom can protect himself through indi-vidual
budgeting. For an individual or a family,
disability is not a predictable risk. None of us knows
whether or not he will suffer disability in the ensuing
12 months, or the duration of such disability, if it
comes, or the financial burdens it will bring.
Disability presents a more serious threat to the
economic independence of workers and their families
than an equivalent period of unemployment. The
disabled worker is in even greater need of protection
than the unemployed worker. Without comple-mentary
provision for disability insurance, our
present unemployment compensation insurance pro-gram
presents an anomaly in that the unemployed
insured worker loses unemployment compensation if
he is doubly unfortunate in becoming disabled as well
as unemployed.
The relative 'prevalence of disability and unem-ployment.
It has been estimated that on an average
day there are some 3.5 million persons who, but for
their disability resulting from disease or injury,
would be at work or seeking work. The actual num-ber
so disabled on a day will seldom, if ever, vary by
more than 20 percent from the average of 3.5 million.
Therefore, according to the season, the prevalence of
epidemic diseases and similar factors, probably from
3 to 4 million persons (6 to 8 percent of the labor
force) are unable because of disability to work or to
look for work on a given day.
i Readers are referred to the Pall-Winter 1942 issue of the
U. C. C. Quarterly (pages 38-43) where this same topic was
discussed historically under the title of Compulsory Health
Insurance.
- This article is taken from an address delivered by Mr.
Sanders at the Interstate Conference of Employment Se-curity
Agencies, Louisville, Ky , on October 20, 1943. Atten-tion
is called to a study
—
The Prevalence of Disability
Recorded Through Four Monthly Sample Surveys—by
Barkev S. Sanders and David Dederman, published in the
Social Security Bulletin for August, 1943.
The prevalence of unemployment has varied widely
in recent years. According to the most recent esti-mate
by the Census Bureau (September 1943), the
unemployed numbered 800,000 or about 1.5 percent
of the labor force. In July 1940, on the other hand,
nearly 12 times as many persons—9.3 million—were
jobless. In 1932-33 the unemployment figures were
much higher. The best available estimate indicates
that in 1933, manufacturing workers lost on the
average 40 percent of their regular working time
through unemployment.
Thus in years of extensive unemployment the
volume of unemployment may greatly exceed the
volume of disability. In years of reasonably goo'd
employment, such as 1941, the prevalence of these
two risks may be about equal, while in boom years,
such as 1942 and more particularly 1943, the volume
of disability may considerably exceed that of unem-ployment.
If the risks of disability or of unemployment were
evenly divided among all persons in the labor force,
the economic consequences would not be very serious.
Concentrated on the relatively few who actually lose
a job or become disabled, the impact may be dis-astrous.
The frequency of occurrence. Among 1,000 per-sons
in the labor force, about 600, on the average,
will be disabled for a day or more during the course
of a year, and these 600 will suffer at least 1,000
spells of disability. Some 200 persons out of each
1,000 are disabled for more than a week during a
year, and in the year there are about 250 spells of
disability of such duration per 1,000 persons in the
labor force.
The frequency of spells of unemployment varies
widely at different times and from place to place. It
is estimated that for each 1,000 workers in the labor
force in 1940, there were some 300 spells of unem-ployment
lasting a day or longer. Spells of un-employment
lasting more than a week numbered
about 250 per 1,000 persons in the labor force
—
approximately the same number as that estimated
for spells of disability lasting more than a week.
Duration patterns. A distribution of spells of
disability lasting more than a week and of similar
spells of unemployment in, say, 1940 shows approxi-mately
the following pattern:
Spells of—
Disability Unemployment
More than 1 week 1,000 1,000
More than 2 weeks . 650 840
More than 3 months 100 220
More than 6 months 40 100
More than 12 months 25 40
Page 52 THE U. C. C. QUARTERLY Spring, 1 944
When longer periods of time are considered, the
portion for disability eventually overtakes and ex-ceeds
that for unemployment.
In 1940 the volume of unemployment was about
twice the volume of disability in terms of all dura-tions
exceeding a week but not a year. The threat
of unemployment to economic security is not, how-ever,
twice that of disability, since disability entails
not only loss of income but also additional expendi-tures
for medical care.
Disabality as a cause of dependency. Many
studies made during the last half century have
shown repeatedly that sickness and disability consti-tute
the most important single cause of dependency.
Only in years of widespread unemployment does the
contribution of sickness and disability to dependency
drop to second place. Today, sickness and disability
are probably responsible for about three-fourths of
existing dependency as judged from past studies.
Historically, other than in the United States,
social insurance protection against the risks of disa-bility
invariably antedated or accompanied provisions
against the risks of unemployment. I believe that
the United States is unique among the nations in
having general unemployment insurance without a
corresponding system of compensation for disability.
This gap in our social insurance program ought to
be closed if we are to provide reasonable protection
against economic insecurity.
SPECIFICATIONS OF A TEMPORARY
DISABILITY COMPENSATION PROGRAM
Coverage. Protection against the risk of tem-porary
disability should be extended to all wage
earners and salaried workers. It cannot be extended
so readily to the self-employed. For the self-em-ployed
definite evidence of income loss because of
disability is often problematic and it is difficult to
establish the amount of such loss. Coverage should
be identical for temporary disability and unemploy-ment
in order to avoid completely any gaps in pro-tection
and to eliminate any possibility of selection
by workers of one benefit as against another.
Qualifying requirements. The object of tempor-ary
disability compensation is to compensate workers
for part of the wage loss resulting from disability.
Therefore, only those who depend on their earnings
can be considered eligible for these benefits when
their earnings cease because of disability. A
worker's eligibility for temporary disability must
depend upon evidence that he is more or less regu-larly
a member of the labor force. This evidence may
be established on the basis of some minimum earn-ings
such as to give evidence of attachment to the
labor force within a designated period of time pre-ceding
the claim. The eligibility requirement for
temporary disability will thus be similar to that for
unemployment compensation. In a coordinated
social insurance system the requirements should be
identical, so that workers who met the earnings
qualification for the one benefit would ordinarily
qualify also for the other, and hence would have no
incentive to claim sickness benefits when unemployed
or unemployment benefits when sick.
Definition of compensable disability. What should
be the test of compensable disability? Should a
carpenter who has injured a hand (assuming this
injury was not in the course of his occupation) be
eligible for compensation, even though he is able to
undertake other work which does not require the use
of his injured hand? A restrictive definition of
compensable disability which declared him ineligible
would create undue hardship. It would be unreason-able
to require workers to take up new occupational
pursuits when their disability is of a temporary
character. Even when early recovery is not certain,
it is socially desirable and administratively sound to
compensate all disabilities which make it impossible,
or injurious to health, for workers to continue in
their current and—in the case of the unemployed
—
in their most recent or customary—occupation.
Certification. Certification of disability by a
qualified medical practitioner should be a requisite
for all claims. As a routine, such certification must
be required with each weekly claim for compensa-tion.
Since effective certification of disability by a
qualified physician is the cornerstone of a well-managed
disability compensation program, the
requisite administrative arrangements for it will be
considered subsequently in greater detail.
Rate of benefit. As in the case of qualifying re-quirements,
it is desirable that the benefit amount
for unemployment and for sickness be the same, in
order to minimize any tendency for individuals to
claim one set of benefits in preference to the other,
thus placing additional burdens on the administrators
of these programs. Consequently, even though dis-abling
sickness causes a greater drain on the eco-nomic
resources of the worker, it is inadvisable for
cash benefits in temporary disability to exceed those
for unemployment. The additional risk of medical
expenses should be met by appropriate insurance
provisions for medical care rather than by more
generous cash disability benefits. Since the costs of
medical care are highly variable, the worker will
furthermore be much more adequately protected by
such an arrangement.
It is, of course, impossible to be sure that the
individual worker will receive sickness and unem-ployment
benefits of the same amount unless the two
systems are coordinated. However, the amounts will
be more nearly alike under separate systems if the
benefit formulas which are used follow similar
patterns. There would probably be no disagreement,
in this group, that benefits which are too small to
provide even subsistence are inconsistent with the
purpose and objective of social insurance. The
minimum benefit for those who qualify might well
be the same for sickness as for unemployment bene-fits.
It is also necessary to have a maximum ; the
object of social insurance is to provide basic pro-tection.
It is particularly important in the case of disability
to assure that the benefits are not so attractive as to
discourage the incentive to work. To meet this
criterion and at the same time avoid the payment of
benefits so small that they utterly fail their purpose,
(Continued on Page 58)
Spring, 1 944 THE U. C. C. QUARTERLY Page 53
North Carolina Plants Continue to Win Awards
The Army-Navy "E" and the Maritime "M"
awards won by the firms named in our Honor Roll,
have been given for outstanding production of the
materials demanded by war. The plants above which
award pennants fly should be viewed by all North
Carolinians with special pride.
To flags which have flown six months or longer,
stars are now being added as testimonials that the
plants are equalling or exceeding the record made in
winning the original penants. All initial awards are
reviewed periodically to determine whether a service
star is likewise due. A decrease in production
standards due to a situation within the control of
plant personnel, either management or labor, could
bring withdrawal of the pennant.
In the case of each award, excellence in the quality
as well as the quantity of production, rather than the
size of an establishment, are decisive. Careful
surveys of factors which are considered essential to
"Excellent" production are made by government
authorities. When a survey is favorable, the plant is
nominated for approval as a winner. The basis on
which surveys are made includes an examination as
to the kind and amount of production on war con-tracts,
the ratio of such war production to other
output, and the quantity produced in terms of avail-able
facilities. Weight is given to a plant's demon-strated
ability to overcome such obstacles as con-struction
changes, material shortages, maintenance
of equipment, and the shift from civilian to war
production.
The character of a plant's industrial relations are
also studied. Are fair labor standards in practice?
Are living and working conditions such as to attract
and hold the best workers and reduce labor turn-over?
By what means is the employee complement
kept full at all times ? Full operation of a plant is of
first importance and requires a training program for
honor Roll—North Carolina firms Which Have
Won War production Awards
COMPANY Place Date Product
ARMY-NAVY "E"
"'Chatham Manufacturing Co__ Elkin August, 1942 Blankets
"Cramerton Mills . September, 1942
Cloths
"P. H. Hanes Knitting Co Winston-Salem November, 1942 Underwear
Engines
Carolina Aluminum Co. _ Badin November, 1942 Aluminum
'National Munitions Co Carrboro January, 1943 Ammunition
J. A. Jones Construction Co._. Charlotte March, 1943 Camp Mackall
"Wright's Automatic
Durham April, 1943
ments
lily the Brothers Co April, 1943
Goode Construction Co Charlotte April, 1943 Camp Lejeune
April, 1943
April, 1943
Camp Lejeune
Barnhardt Manufacturing Co. Charlotte Textiles
•Revolution Cotton Mills
(Cone). Greensboro May, 1943 Textile products
'Proximity Manufacturing Co.
(Cone).. . Greensboro May, 1943 Textile products
Marshall Field & Co Sprav August, 1943 Woolen goods
North Carolina Finishing Co.. Salisbury March, 1944 Textile products
Firestone Cotton Mills. . .. Gastonia March, 1944 Textile products
U. S. Rubber Co.... April, 1944
MARITIME "M"
"""North Carolina Shipbuilding
Co Wilmington August, 1942 Cargo vessels
Also has Merit-Eagle Pennant
'(Stars awarded for continous meritorious production.)
some labor replacements, conducted in such a way
that it does not slow down production.
Plant management is accredited in proportion as
there is evidence of cooperation among its own de-partments
as well as with the Government's pro-gram.
Is management deficient in any respect, or
has it done everything possible to increase produc-tion
and decrease cost?
The extent of a plant's provisions for the safety
and health of its working force is also an important
Various persons who took part in the North Carolina Finishing Co. award program heard Governor J. M. Broughton of
North Carolina, as master of ceremonies, open the program. Illustration reproduced through courtesy of Textile Bulletin.
Page 54 THE U. C. C. QUARTERLY Spring, 1 944
Worker carefully stacks some of the thousands of shining
shells prior to shipment to the fighting fronts. Official OWI
Photo by Ank Rosener.
factor in these awards. Accident records, sanitation,
and protective measures in use for safeguarding
health are all considered.
War production awards are not lightly bestowed,
but have been truly and well earned by those who
receive them. They are real badges of merit.
U. S. RUBBER CO.
Announcement was made in March, 1944, that the
shell-loading plant of the U. S. Rubber Company
which was built in Charlotte—construction began in
the summer of 1942—has already won an "E" award
in the relatively short time it has been operating.
Presentation of the award took place in April. A
feature of the occasion was an address by Rear
Admiral George F. Hussey, Jr., Chief of the Navy
Bureau of Ordnance to the thousands of war workers
gathered for the ceremony.
WRIGHT AUTOMATIC MACHINERY CO.
A second star was added this April to the Army-
Navy "E" pennant flown by the Wright Automatic
Machinery Co. of Durham. The Wright plant re-ceived
its original award "for excellence in per-formance
of war production" in April 1943. A first
star was added in September, 1943, and the second,
star in April, 1944.
The Wright Automatic Machinery Co. is making
fire control instruments for the U. S. Navy. Con-struction
of the present modern plant was under-taken
in September 1941, for the purpose of making
Automatic packing machinery. Six months later it
was in production—turning out the tools of war.
Sharing in the Wright award are about 1,000 care-fully
trained workers.
Looking beyond its present war production, the
company intends in peacetime to return to its-original
plan of manufacturing packaging equipment.
Presentation ceremonies of the "B" pennant to the Wright
Automatic Machinery Company in Durham.
Employes of the Wright Automatic Machinery Company greet
the news of their first Army-Navy "E" award.
Spring, 1 944 THE U. C. C. QUARTERLY Page 55
FIRESTONE COTTON MILLS
The Gastonia plant of the Firestone Cotton Mills
celebrated its award of the Army-Navy "E" in
March. Taking part in the ceremonies were Russell
Firestone representing the parent company, the
Army and Navy representatives, Governor J. M.
Broughton, Mr. Harold Mercer, Vice President and
General Manager of the Gastonia plant, Mr. Nelson
Kessell, plant Superintendent, Mr. W. A. Karl, Vice
President in charge of textile manufacturing, and
five workers chosen to represent the others. Master
of ceremonies was Mr. Hugh James, Voice of Fire-stone
radio announcer. The Firestone plant, with
some 2,000 employees, makes tire cord fabric.
NORTH CAROLINA FINISHING CO.
The "E" flag was presented to the finishing com-pany
at ceremonies in Yadkin in March by Col. T. W.
Jones of the Philadelphia Quartermaster Depot,
representing the Army ; while "E" pins, which each
worker is entitled to wear, were presented to Clifford
Myrick, Laura Walser and Reuben Walser on behalf
of the others, by Capt. W. S. Popham in charge of the
Naval ROTC at Chapel Hill, representing the Navy.
Five workers were chosen to accept the "E" award for the
Firestone workers as a whole. Appearing from left to right
are Private Robert Williams, former Firestone employee,
wounded overseas and now convalescing at a Government
Hospital, who came to pin badges on the workers; Ben Davis
from the Carding Department (son in Navy); Mrs. Mattie
McDanie from the Spinning Department (three sons in
service), who has not missed a single day's work since Pearl
Harbor; Mrs. Bessie Gaines of the Spooling Department (two
sons in service); Mr. Carmer Little of the Mechanical Depart-ment;
and Mr. Mayberry Prince (not in picture) of the Weav-ing
Department.
THE EDWARDS CO.
The Edwards Division of the Deisel Engine and
Aircraft Corporation, located in Sanford, has also
been awarded the Army-Navy Service Star for
"meritorious services on the production front," in
addition to the pennant which the company was
already flying. The Edwards Co. manufactures air-plane
and ordnance parts.
NORTH CAROLINA SHIPBUILDING CO.
This company which won the Maritime Com-mission's
"M" pennant in 1942, for its record pro-duction
of Liberty Ships at Wilmington is now the
proud possessor of ten gold stars and the Commis-sion's
"Eagle" award.
Harold Mercer, R. A. Firestone and Ben Davis (left to right)
display the pennant presented to Firestone Cotton Mills. Illus-tration
reproduced through courtesy of Textile Bulletin.
Award of the Army-Navy "E" is made to the Firestone Cotton
Mills of Gastonia. The entire group of workers assembled in
front of the plant for the occasion.
Page 56 THE U. C. C. QUARTERLY Spring, 1944
Neither Too Young Nor Too Old
(i)
(2)
With our nation engaged in its greatest war pro-duction
effort, employment demands have been call-ing
forth all our country's labor resources. In many
ways and in many places both the young and the old
are putting their shoulders to the wheels of industry.
The extent to which young people have entered
employment in North Carolina is indicated by the
more than 100,000 child labor permits which the
State Department of Labor reports having issued
since the beginning of the war—chiefly to 16 and 17
year olds.
Under the Governor's Emergency War Powers
Proclamation, relaxations in the hours of work for
minors and for women are permitted under certain
specific conditions. Among the young girls working
on special employment permits in order to meet war
conditions, are telephone operators such as those
shown at the switchboard of the Charlotte exchange.
(1)
TELEPHONE GIRLS are rendering a conspicuous
war service. See story on opposite page. Photo by
Southern Bell Telephone Company.
(2)
MATURE SKILLS gained from long experience are
needed back of the production drive. Illustration
shows a die maker in a converted Kentucky watch
case factory who brings rare ability to the plant's
war-time job of making compass cases, fuze baffles,
machine gun parts and other essential articles.
Official OWI Photo by Palmer.
(3)
A GRANDMOTHER with two sons in the Army,
does her daily shift in the family's garage shop.
Mrs. Earl La Roe of Eustis, Florida, is shown cut-ting
worm gears required for Army aircraft equip-ment,
as part of the war production from an indus-trial
pool. Official OWI Photo by Hollem.
(3)
SPECIAL STUDIES MADE IN 1943 BY BUREAU
OF RESEARCH AND STATISTICS
Changes in Coverage, Employment and Wages, By
Size of Firm—Jan. 1940-Dec. 1942.
Effect of Demobilization and Readjustment on North
Carolina Employment and Unemployment Com-pensation.
Employment Due to War Production.
Employer Experience Rating in North Carolina.
Geographic Distribution of the Nort